Facilitator:

Dr. Fayez Albadri

Case Study:
Implementation of Enterprise Resource
Planning (ERP) at Rolls Royce
2014

Wajahat Ali

Student ID: 871222

6/13/2014 At 5:00 PM

Unit 403: Managing Information Systems

UAE, RAK Campus.

 Table of Contents
Executive Summary .......................................................................................................................................... 3
1.0 Introduction ................................................................................................................................... 5
1.1. Company Background ........................................................................................................................... 5
1.2. Vision, Mission, Core Values ............................................................................................................... 5
1.3. Offered Services .................................................................................................................................... 5
1.4. Financial Information ............................................................................................................................ 5
1.5. SWOT Analysis .................................................................................................................................... 6
1.6. Problem Solving Approach ................................................................................................................... 6
2.0 System Analysis ............................................................................................................................................ 7
2.1. Problem Definition ................................................................................................................................ 7
2.2. Causes of the problem ........................................................................................................................... 7
2.3. Soluion Objectives ................................................................................................................................ 8
2.4. Idenification of Alternatives.................................................................................................................. 8
2.5. Evaluation & Selection of Alernatives .................................................................................................. 8
3.0 Implementation............................................................................................................................................ 9
3.1. Design Specifications ............................................................................................................................ 9
3.2. Acquire Hardware ............................................................................................................................... 10
3.3. Delevop/Acquire Software .................................................................................................................. 10
3.4. Test The System .................................................................................................................................. 10
3.5. Training & Documentation ................................................................................................... 11
3.6. System Conversion ............................................................................................................... 11
3.7. System Evaluation ................................................................................................................ 11
4.0.Conclusion................................................................................................................................................... 13
5.0.Recommendations...................................................................................................................................... 13
6.0.Bibliography ............................................................................................................................................... 14

Wajahat Ali/ 871222

 Executive Summary:
In this research paper, a case study is conducted at Rolls-Royce, investigating the old system previously
implemented and the implementation of ERP (SAP R/3) is also discussed. The case study is divided into 2 main
sections.

The 1st section of the case study starts off with introducing the company and its background, its vision, mission
Core values, Rolls Royce’s financial position in the market and SWOT Analysis is conducted.

The 2nd section, which is the System Analysis phase, focuses on investigating the main problems faced by
Rolls Royce, their causes, selecting a suitable Information Systems strategy and in the sub section, the ERP
implementation is discussed. In order to address the organization’s weaknesses to enable it exploring available
opportunities in utilizing Information System as a mean for improvement, thus enhancing its key strengths with
effective management of its knowledge asset, this report has been prepared using Laudon & Laudon’s 4 Steps
Problem Solving and IS Building Model to:

1- Define & Understand the problem

2- Develop alternative solutions
3- Choose the best solution
4- Implement the solution

In order to overcome the problems stated in the report, Rolls Royce should take the following steps in order to
get substantial competitive edge over its competitors.



Optimize the use of Information System for strategic decision makings


Timely retrieval of data and information


To automate business processes


Modification of existing processes to adjust and fit in the new IS systems available
Data base building to batch and track documents and correspondences automatically
and schedule reviews and approvals

To overcome these problems; two alternate ERP systems are taken into consideration for Rolls-Royce. They are
1- SAP
2- Oracle E-Business Suite

After evaluation between SAP R/3 and Oracle E-Business Suite and SAP R/3 is chosen as the best ERP solution
to be implemented.

In the next section of the paper, the Implementation of the chosen Solution has been studied. A detailed
design specification of the Rolls Royce has been studied, the details about the hardware and software, being
acquired, have been studied. The hardware components of an SAP R/3 installation include



The servers that house the databases and software programs


The client workstations for user interfaces, and
The network communications system that connects servers and workstations

The software components of an SAP R/3 installation consist of the following



Network infrastructure


The operating systems


The database engine
The client desktop.

In order to test the system, an ERP Pilot is created and run for 3 months to demonstrate business principles,
processes, and procedures, the hardware, software and data transfer.
After Testing the System, in the next phase, training of the employees has been conducted in order to have
practical knowledge about the newly installed IS system.

Finally, the date has been transferred from old system to the new system at the ‘Go Live’ phase and now the
system is fully functional and the old system was switched to ‘View only mode’

Wajahat Ali/ 871222

After successful implementation and the following objectives of the new systems have been achieved

1- Optimized the use of Information System for strategic decision makings

2- Now data and information can be retrieved in a timely manner
3- Business processes have been automated
4- Existing processes has been modified and adjusted in the new IS systems.

Wajahat Ali/ 871222

 1. Introduction:

1.1 Company Background:

Rolls-Royce is one of the most famous names in engineering throughout the world. Rolls-Royce grew from the
electrical and mechanical business established by Henry Royce in 1884. Royce built his first motor car in 1904
and in May of that year met Charles Rolls, whose company sold quality cars in London.

Rolls-Royce returned to the private sector in 1987 and acquired Northern Engineering Industries in 1989. This
acquisition allowed Rolls-Royce to consolidate its capabilities in the area of industrial power. A further
acquisition was made in 1995 when Rolls-Royce bought the Allison Engine Company in the United States, thus
enlarging the company’s presence in aero propulsion and industrial gas turbines. The acquisition allowed Rolls-
Royce a major foothold within US markets. The most modern family of engines is the Trent series, which are
also powerful three-shaft turbofan engines similar to the RB211, and are used to power the Airbus A330, A340-
500/600.

Today it is the world's second largest civil aero engine company, the world's second largest defense aero engine
company, a global leader in marine propulsion and a leading supplier of energy solutions. All of these
businesses have gas turbine technology at their heart.

Rolls-Royce celebrated its centenary throughout 2004 with a series of special events for customers, partners
from education and industry, as well as employees, families and friends in the UK, Germany, Scandinavia North
America and the Far East.

1.2: Vision, Mission and Core Values:

Vision - Better power for a changing world

Mission - understanding our customers, innovation, profitable growth
Values:

 Trust: can only be earned by the way we behave with customers, shareholders, partners and


colleagues
Deliver: we develop long-term relationships with customers and we must deliver consistently on
their behalf
 Excellence: a standard, our way of life, few companies can aim higher. (Rolls-royce.com, 2014)

1.3 Offered Services:

Since its inception, the Rolls-Royce name has become synonymous with integrity, reliability and
innovation associated across its four main business sectors .Rolls Royce is a global provider of
integrated power systems and services to the following industries.



Civil aerospace


Defense aerospace

 Energy markets
Marine

1.4 Financial Information:

Wajahat Ali/ 871222

1.5 Rolls Royce’s SWOT Analysis:

 Rolls-Royce holds number one position in the super-luxury car segment.

Strength (Business)

 Major market share with leading aircraft manufacturing companies like Airbus and Boeing

 The company used a system known as CPA for monitoring financial transactions which included
Strength (IT)

 Rolls Royce used a CAD system that supported in the process of altering the file formats.
pipeline inventory, inter-site transport.

 Perception of high prices

Weakness (Business)

 Constant delay in delivery of engines to clients. For example, Boeing blamed engine make Rolls Royce
for yet another delay in delivery for its first 787 Dreamliner. (Robertson, 2010)

 Data redundancy was a major area of concern in Rolls Royce.

Weakness (IT)

 In the current system the data was not normalized, screened and was not stored in a sensible format in

 The company lacks a legacy system. The company has implemented more than 1500 systems over a
the data repository which led to problems in copying data to other systems.

 Due to numerous systems used within the company, they had problems establishing direct online
period of time.

 Systems were conventional with absolutely no room for growth to sustain changing business
communication with customers and partners.

 The company used a system called MERLIN, which was a scheduling system based on MRPII systems.
environment.

The software was capable enough to handle the scheduling but involved a lot manual manipulation.

 Internationalize there operations as an active player in the modern market

Opportunities (Business)

 Modification of business process to adjust and fit in the new ERP systems available
 Workshops and training to employees should be provided to work with the current systems and the

 Demand for comfortable and relatively cheaper cars.

systems that are to be implemented to make the maximum benefit out of the systems implemented.

 Implementation of an ERP system that would reduce manual manipulation which would reduce time
Opportunities (IT)

consumption.

 The rising price of raw materials such as steel threatens to offset the company’s earning
Threats (Business)

 Threat from rival companies such as Engine Alliance who manufactures and supplies air craft engines

 Use of SAP by other major manufacturers in the market.

Threats (IT)

 Engine Alliance has already implemented SAP A&D (Aerospace & Defense)
 Transmission of data across communication links due to globalization poses IT Security risk
to the data. (Chadha, 2014)

1.6 The Problem Solving Approach

In order to address the organization’s weaknesses to enable it exploring available opportunities in utilizing
Information System as a mean for improvement, thus enhancing its key strengths with effective management of
its knowledge asset, will use Laudon & Laudon’s Four Steps Problem Solving and IS- Building Model:

Wajahat Ali/ 871222

Fig: Four Steps Problem Solving and IS- Building Model (MIS Study Material, 2013)

2.0 Systems Analysis:

2.1 Problem Definition:
2.1.1 Problem Identification:
Rolls Royce has been a global power system and services company, yet the company had several problems
in their management systems. Rolls Royce currently uses a number of systems, approximately more than
1500 systems. Many of these systems were developed within the company itself.

The company had no particular ERP system, and maintaining and operating a legacy system would fall
expensive and difficult.

2.2: Causes of the problem:

 The current systems did not provide an accurate, consistent and accessible data which was important


for timely decision making and performance assessing
These systems are quite out dated and often had problems in compatibility to the new manufacturing


environment


Data redundancy was a major area of concern in Rolls Royce.
In the current system the data was not normalized, screened and was not stored in a sensible format in


the data repository which led to problems in copying data to other systems.
Due to numerous systems used within the company, they had problems establishing direct online


communication with customers and partners.
Systems were conventional with absolutely no room for growth to sustain changing business


environment.
The company used a system called MERLIN; which was a scheduling system based on MRPII
systems. The software was capable enough to handle the scheduling but involved a lot manual


manipulation.
The company worked with systems for controlling procurement, finance and commercial functions
which had problems in communicating with former systems.

Wajahat Ali/ 871222

2.3 Solution Objectives:

 Optimize the use of Information System for strategic decision makings

 Timely retrieval of data and information
 To automate business processes
 Modification of existing processes to adjust and fit in the new IS systems available
 Data base building to batch and track documents and correspondences automatically
and schedule reviews and approvals

2.4: Identification of alternate solutions:

There are two alternate ERP systems that are taken into consideration for Rolls-Royce. They are

Alternate 1:

SAP - Systemanalyse und Programmentwicklung (System analysis & programme development in

data processing), which is a German enterprise software application

Alternate 2:

Oracle E-Business Suite which is a collection of applications.

Both ERP systems are rated on top two in the list of ERP systems.

2.5 Evaluation & Selection of Solution:

It is very difficult to determine the best ERP system fit for the company as it depends on the function
and requirements of the company. However a common difference between SAP and Oracle is given
below:

SAP Oracle (E-Business Suite)

1 SAP is focused on people do their jobs better. 1 Oracle is focused on helping computers to do
their jobs better.

2 Implementation takes longer time with ‘more’ 2 Takes less time for implementation with a few
efficient results. inaccuracies.

3 SAP customers are more satisfied with higher 3 Oracle did not meet the required satisfactory level
level executive satisfaction, employee of customer requirements.
satisfaction and customer satisfaction.

4 Maintenance rates for SAP customers are lower. 4 Maintenance rates for Oracle customers are
higher as compared to SAP

5 SAP is regarded as ‘Vanilla Software’ (that is 5 Oracle has higher level of flexibility and can be
not customized from its delivered form and can customized to suit the company needs.
be used without any customization applied to it.)

6 SAP continues to enhance and build on core 6 Oracle is moving towards fusion.
product offering

7 SAP has been created on its own from the base 7 Oracle has been developed mainly from gaining
like sales and operation planning, financial best-of-breed point solution. E.g. Acquisition of
reporting, CRM, functionalities into its core Demantra for advance sales and operations
ECC and developed all in one ERP solutions planning, Siebel for CRM etc.

8 SAP has the ability to keep its business risks at 8 Oracle keeps its business at a higher risk during
its lowest operational disruptions during the ‘go- the ‘go-live’ process.
live’ process.

Wajahat Ali/ 871222

 As seen in the above table it is apparent that SAP wins the race when in comparison with Oracle’s E-
Business Suite. Below is a detailed view as in how and what types of SAP technologies that should be
implemented in Rolls-Royce. (Chadha, 2014)

2.5.1 SAP Technologies Recommended for Rolls Royce:

As the study suggests, the company needs to implement an Enterprise Resource Planning system. SAP
would be the best recommended ERP system for Rolls Royce as SAP has been devoted to provide
products that would improve the return and management of information collected by the organization.
Software packages that would be best suited for to meet the current requirements at Rolls Royce would
be:

 SAP R/3 is an integrated computer system that can manage and sustain the entire business
management tasks of an organization. In Rolls Royce, SAP r/3 would be able to handle business
process such as
 Invoice payment,
 Production resource management and
 Financial account control.

These tasks can be accomplished by employing various modules such as MM (Materials

Management) and SD (Sales Distribution). Since, all these modules come under the SAP itself the
communication between departments would not be a problem anymore at Rolls Royce.

 SAP Aerospace and Defense (A&D) it is known for its configurable flexibility. The system allows
intelligent and quick response to demand and supply of dynamics across global supply network to
serve the purpose of outstanding performance based services.

SAP for A&D supports processes in



Manufacturing


Operations,


Proposal management


Program management,


Project management.


Contract management.


Manufacturing management.
Order management.

3. Implementation:
3.1 Design Specifications:
The vendor will carry out a detailed study of Rolls Royce’s policies, procedures etc.
and identify required specifications including:



Integrate Finance, Manufacturing, Procurement and Distribution of Rolls Royce


Business Processes workflow
To connect all departments and sectors through SAP R/3, so that one can instantly retrieve data
from any department (Exforsys.com, 2014)
 Strategic business Units (SBUs)

The outcome of the study will be a detailed design specification namely:

1. Project Configuration Document
2. The Information Management Policy document (Dana, 2014)

These are used to determine:

1. Placeholder documents
2. Document Attributes (types, categorization and classification)

Wajahat Ali/ 871222

 3. Document Fields (confidentiality, identification and traceability mandatory inputs in predefined
format)
4. Mail attributes (Managing Information System~ Sample Assignment, 2014)

3.2 Acquire Hardware

Many of today's corporations run their businesses on the SAP R/3 application suite. High availability of
these applications to the user community is essential. Downtime means lost sales, profits and worse. The
combination of SAP R/3 and Microsoft Cluster Server is an important element in providing the required
access to key business applications.
The hardware components of an SAP R/3 installation include


 Microsoft Cluster Server environment (MSCS) running Microsoft Windows NT 4.0
The servers that house the databases and software programs


on Netfinity servers


The client workstations for user interfaces
The network communications system that connects servers and workstations.

3.3 Develop/Acquire Software:

The software components of an SAP R/3 installation consist of the



Network infrastructure


The operating systems

 Oracle
The database engine

 DB2 or SQL


The client desktop.
The data repository for the RDBMS and the basis module (as a prerequisite for all application
modules) are also installed onto the servers. (Redbooks.ibm.com, 2014)

3.4 Test the System:

The ‘ERP pilot’ a small-scale pilot of the system was run for 3 months and throughout this period, a
facility known as number 4 shop, which was part of the transmissions and structures operations unit
became the central focus of attention for the whole company. This facility was chosen for the pilot run
because the facility only produced 280 parts, and material flowed into the facility at low volumes from
external suppliers and internal operational units. The purpose of the pilot was to demonstrate:



Business principles;


Processes;


Procedures;


Role definitions and behaviors;
Software, hardware and data transfers.

A 2nd Pilot was also carried out for nonproduction purchasing. The second pilot ran executively,
covering Derby-based purchasing of ground support equipment.
A 3rd Pilot also was run by the Airline Business. The third pilot was non-executive, but designed to
specifically explore the interplay between Metaphase PDM and SAP.

We had to go through a number of tests including;

1. Symmetric tests,
2. Aptitude tests,
3. Interviews,

Wajahat Ali/ 871222

3.5 Training & Documentation:
The implementation of ERP Pilot has created two new roles at Rolls-Royce, these key roles were:


 Capacity owners.
MRP controllers;

MRP Controllers and Capacity Owners were sent on a residential behavioral course for 2 weeks and for
most of them this was their first glimpse at how they would be working in the future.

We’ve got 20 users at Ansty, in the pilot and to connect those users we’ve had to install a lot of fiber
network throughout the Ansty site. It’s such a huge task of delivering the infrastructure, that’s the
reason why people have been so frustrated, saying things like, I go live in 4 weeks and I haven’t got a
piece of kit yet!

An MRP Controller is going to be in charge of the inventory, and getting the raw material in, and
talking to the supplier and the customer. But they’ve also got to release the material to the shop floor,
and then release the material when it’s finished as a component to the customer.’’
—Core Implementation Team Member (c).

Once they’ve been trained and know how to use that piece of kit they will have it there and then. The
second thing to bear in mind is to really understand what roles the user is going to play in the pilot.
This is to ensure that we have the right access permission correctly set-up for the user so they can use
SAP correctly.’’—Core Implementation Team Member (d).

Systems testing and getting the user to accept the system were important roles undertaken in the Pilot.

3.6 System Conversion (Go Live):

As the main ‘Go Live’ of the new system was planned, the most difficult part of the cut over process
was in transferring the data from legacy systems. The sheer volume of data that has to be transferred is
far greater than any normal transaction load that will be carried out by the system thereafter. In order
for this process to be successful the data must be kept in a ‘stable’ state for a period of roughly 10
weeks.
The initial data to be transferred includes some transaction data and master data, for example, lists of
suppliers. If any changes occur to the data on the old systems after the transfer, they are logged and
then passed through to the new system. The remaining data was loaded in after the ‘Go Live’.

The next step during the ‘Go Live’ process involved running the MRP system to initialize the whole
system. Purchase orders and purchase requisitions was not transferred from the old system, instead the
MRP run should create them fresh. The whole ‘Testing’ process took roughly 2 weeks to complete, and
during this time the new system was ‘off the air’.

Immediately after the ‘Go Live’ the existing legacy systems was switched to view only mode. The
view only mode enabled comparisons to be performed between the old and new systems. However, the
legacy systems ceased to be executive.

3.7 Evaluation of the Solution:

It was very difficult to determine the best ERP system fit for the Rolls Royce as it depends on the
functions and requirements of the company. However the core implementation team found that SAP
R/3 & SAP Aerospace and Defense (A&D) is the best fit solution for the company. After successful
implementation, the management evaluated SAP R/3 and measures their performance by finding the
following improvements in their business processes.

 Increases customer satisfaction due to the higher availability of products

 Accurate & timely information leads to reduced reconciliation's and better management of
the billing process leading to quicker payment and a reduction in accounts receivable (DSO),
number of disputes per order.

Wajahat Ali/ 871222

  Reduction in sales order processing costs.
 Reduced time to calculate selling price.
 Increased Cash Flow (one-time event).
 Savings result due to access to real-time transaction information by all authorized users
(visibility),
 Reduced distribution costs.
 Reduced order-to-delivery time.
 Reduced delivery-to-invoice time. (Erpgreat.com, 2014)

Wajahat Ali/ 871222

 4.0 Conclusion
Successful implementation of ERP requires a structured methodology which is strategy-people and process
focused which is the only way to manage risk effectively. A good methodology is one which covers all
expectations without severe negative consequences even when unexpected situation pops up (Donovan). Rolls
Royce is a large business with complex process and such project would require the whole business to be
assessed thoroughly for the effects. A company with a magnitude of ten medium sized companies as one would
cause administrative difficulties while implementing a new system particularly in the first phase while creating
the strategy and planning. Rolls Royce need to understand business, cultural and technical difficulties of such a
large project and must develop a solid core implementation team. It is bound that a project of this size would
never run smoothly without a team using their specialized skills of consultancy specialists. This team must take
into account both the needs at the managerial and end user levels. They need to understand and solve the
problems such as matching the process to software configuration, providing adequate training so as to reduce the
resistance to change, enable new way of work, and bridge the gap between the legacy systems and the new
system and so on.

SAP gives a guarantee that their newer version of the software’s will upgrade SAP reports. However, reports
specially created would require re-writing of the software. ERP systems are characterized by features such as
functional coverage, single database, interdependent relationships and standard management and processing
rules; all of which are able to bring various kinds of changes in the company and enhance productivity

By using Laudon & Laudon’s Four Steps Problem Solving and IS- Building Model, the study has concluded that
Rolls Royce should implement a project collaboration IS solution in order to support its core processes and
knowledge asset management in order to:

1- Eliminate the manual procedures, for task and request assignments and delegation
2- Data base building to batch and track documents and correspondences automatically and schedule
reviews and approvals

5.0 Recommendations:
It is concluded that, to achieve the above, it is recommended that Rolls Royce should take the following steps in
order to better compete in the market and make efficient use of the technology.

1- Optimize the use of Information System for strategic decision makings

2- Timely retrieval of data and information
3- Automate business processes
4- Modify existing processes to adjust and fit in the new IS systems available

Wajahat Ali/ 871222

 6.0 Bibliography
Chadha, K. (2014). Proposal for Rolls-Royce to adopt ERP system. 1st ed. [ebook] India.
Available at: http://www.slideshare.net/chadhakunal/proposal-for-rolls-royce-to-adapt-an-
erp-system [Accessed 9 Jun. 2014].

Erpgreat.com, (2014). Advantages Of SAP ERP. [online] Available at:

http://www.erpgreat.com/general/advantages-of-sap-erp.htm [Accessed 12 Jun. 2014].

Exforsys.com, (2014). ERP Solutions | IT Training and Consulting – Exforsys. [online]

Available at: http://www.exforsys.com/services/erp.html [Accessed 11 Jun. 2014].

Managing Information System~ Sample Assignment. (2014). 1st ed. Abu Dhabi.

Mbaskool.com, (2014). Rolls Royce Motors | SWOT Analysis | BrandGuide | MBA Skool-
Study.Learn.Share.. [online] Available at:
http://www.mbaskool.com/brandguide/automobiles/4328-rolls-royce-motors.html [Accessed
7 Jun. 2014].

Redbooks.ibm.com, (2014). IBM Redbooks | Implementing SAP R/3 4.5B Using Microsoft
Cluster Server on IBM Netfinity Servers. [online] Available at:
http://www.redbooks.ibm.com/abstracts/sg245170.html?Open [Accessed 10 Jun. 2014].

Rolls-royce.com, (2014). Our brand - Rolls-Royce. [online] Available at: http://www.rolls-

royce.com/about/ourstory/brand/ [Accessed 9 Jun. 2014].

Slideshare.net, (2014). Enterprise information systems project implementation: A case ....

[online] Available at: http://www.slideshare.net/Agcristi/enterprise-information-systems-
project-implementation-a-case?qid=6e0bca62-3c78-4768-a2bf-
13faf5deaf07&v=qf1&b=&from_search=4 [Accessed 5 Jun. 2014].

Slideshare.net, (2014). Proposal for rolls royce to adapt an erp system. [online] Available at:
http://www.slideshare.net/chadhakunal/proposal-for-rolls-royce-to-adapt-an-erp-system
[Accessed 9 Jun. 2014].

Yusufa, Y., Gunasekaran, A. and Abthorpe, M. (2014). Enterprise information systems

project implementation: A case study of ERP in Rolls-Royce. 1st ed. [ebook] Business
School, University of Hull, Hull HU6 7RX, UK, p.16. Available at: www.sciencedirect.com
[Accessed 9 Jun. 2014].

Wajahat Ali/ 871222