Case 7 Complete

SAP for ATLAM BKAL3063

Table of Contents

1.0 Introduction..............................................................................................................1

2.0 Problem Statement...................................................................................................2

3.0 Feasibility Analysis..................................................................................................4

4.0 Capital Budgeting Analysis......................................................................................8

4.1 Initial Investment..................................................................................................9

4.2 After-tax Cash Flows for Years 1 through 6......................................................10

4.3 Payback Period...................................................................................................11

4.4 Net Present Value (NPV)...................................................................................12

4.5 Internal Rate of Return (IRR).............................................................................13

5.0 Gantt Chart.............................................................................................................15

6.0 Is Termination Lim is a Right Decision?...............................................................17

7.0 How to Overcome Staff Resistance.......................................................................18

8.0 Conclusion..............................................................................................................20

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1.0 Introduction

Akademi Teknikal Laut Malaysia (ATLAM) was established on 15 August 1981 as to

train and prepare Malaysians for the maritime industry which was located in Melaka

and Terengganu. ATLAM was wholly owned organization of MICT Berhad. Based

on the study conducted in 1997 by the World Maritime University, they found that

ATLAM had a poor IT infrastructure compared to Europe and Japan. This is because

ATLAM was relied on a customized single-user system which was solely for

accounting entries, and it is not functioned to generate financial reports.

The 1997 privatisation of ATLAM to become a subsidiary of PETRA Group

of Company has provided it with an access to better IT facilities. In year 2001, the

management had been asked to upgrade accounting system with the PETRA group-

wide SAP system. SAP was an integrated business application package that covered

most functions of an organization. This system included comprehensive functions of

financial accounting, controlling, asset management, sales and distribution, materials

management, human resources, plant maintenance, project system, BASIS system and

so forth.

Therefore, the Finance and Accounts Manager of ATLAM, Zulkifli Osman,

has been asked to review the plan of implementation the SAP in ATLAM and decide

whether they can upgrade their accounting system. He had to assess the risk

associated with the decision as the implementation of SAP system seems to be giving

big impact on the company’s financial status.

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2.0 Problem Statement

Issue 1: SAP or ACCPA for ATLAM

One of the important issues we need to be discussed is making the right choice by

ATLAM between SAP and ACCPA to establish the campus-wide network. ATLAM

need to consider their fund, facilities and expertise in order to make good decision

making. The implementation of SAP will create many challenges, risks and higher

cost said by Zulkifli and Lim in the article.

Despite from that, there is lack of assets, such as Personal Computer for install

the SAP. Lastly, the key personnel of ATLAM involved in implementation phase do

not have expertise in using SAP. In order to success in implementation phase

expertise person need to assess on issue might occur during the phase. Those three

problems should be considered by project team before proceed with the project.

In order to evaluate the sufficiency of implementation of SAP system project,

we are advised that ATLAM could throughout feasibility study and capital budgeting

analysis to evaluate and analysis the valuable and feasibility of SAP system project in

organization.

Issue 2: Termination of Lim

In the case of SAP for ATLAM, Lim was having conflict on opinion with Zulkifli

when discussing the matter of SAP system in ATLAM. Lim was disagreed to

implement the SAP system in ATLAM because he know there is extreme factors will

faced such as low of fund, lack of expertise, and short of facilities. He relies on his

experience in ATLAM then suggests that need to use ACCPAC system rather than

SAP system.

These contribute to the conflict when Zulkifli was very unsatisfied with Lim’s

behaviour and intended to kick him out of the project team. Kamal advise him that the

critical ideas of Lim is good for organization since he was very experienced in such

related industry. He, advised Zulkifli to reconsider on the termination of Lim.

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Issues 3: Resistance to Change

This resistance to change issue refers to developing a new accounting system with the

PETRA group-wide SAP system. Zulkifli as Finance Manger concern that whether

ATLAM’s employee would be ready to embrace the new system. We found that there

are several reasons the ATLAM is resistance to change at that time. Most reasons are

their lack of information about SAP system and also lack of knowledge about this

system. This is, creating the misunderstanding between Lim and Zulkifli. Lim

understanding is SAP system is only suitable for manufacturing industry and this

system was costly compared to ACCPAC.

In other hands, ATLAM is resistance to change because they are facing the

lack of resource to implement SAP system which are need a lots of funds,

equipment’s, spaces, and intelligence resources . The project team members

were complaint they are not enough Personal Computers in the departments to make

this practical to them. Then they do not even have the space available to house the

system, some of the employee in ATLAM have never used a Personal Computer

before and lack of the knowledge about information technology.

Furthermore, employees are also fear of loss power when change the system in

ATLAM operation. For information, ATLAM is a PETRA subsidiary and has to link

its system to PETRA’s to match with their group reporting structure. Due to this

reason, ATLAM’s employees are fear of loss of the power to control the system

operating and their old job also will be separately divided to each other’s. They are

worried that may change their role and responsibilities.

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3.0 Feasibility Analysis

First of all, we can found that most of the information system project has budgets

and deadlines. For ATLAM, it is not exception. Assessing project feasibility is

required for the implementing of new system. So, for implementing the new system

that is SAP is requires a system analyst, evaluate a wide range of factors. For

implementing on SAP, our group decides choose several feasibility factors that are

important toward the implementation.

3.1 Economic feasibilityEconomic feasibility is required for baseline project plan. The purpose for assessing

economic feasibility is to identify financial benefits and costs associated with the

implementing SAP. Economic feasibility is often referred to as cost benefit analysis.

During project initiation and planning, it will be impossible to define precisely all

benefits and costs related to implementation. Yet, it is important that identify and

quantify benefits and costs, or it will be impossible for conduct a sound economic

analysis and determine whether SAP is more feasible than another. Next we review

worksheets that can use to record costs and benefits and techniques for making cost

benefit calculation. These worksheets are used for decide whether the SAP is valuable

for implementing.

Meanwhile, for determining the implementation benefits, we determine

whether the SAP can provide benefit for ATLAM. A new or renovated IS which is

SAP allow complex segmental reporting, provision for integration of data, system

maintenance and support were possible, audit points raised during procurement

process might be resolved with provision of Materials Management Module. Thus,

SAP could improve ATLAM to be more efficiency, speed and flexibility because can

access data quicker and good for decision making.

Beside, the implementation benefit has been dividing into tangible benefit and

intangible benefit. Tangible benefits are benefit which can be measured in dollar.

Tangible benefit can be seen for the implementing SAP is increase speed of activity

and reduction on error because there is a segmental reporting such divisional profit

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and loss, variance analysis. For intangible benefit, it means that benefit cannot easily

measured in dollar. The intangible benefit can get for ATLAM such improvement of

employee morale, broader societal implication, promote of ATLAM learning and

understanding and more timely information.

Other than determine the benefit, we also have to determine SAP cost. The

cost that include in the development of SAP such implementation of SAP that cost

RM5,000,000; new hardware that cost RM 1,000,000; training costs RM 1,272,550;

and customization work RM 72,840. Meanwhile, we can also dividing out the cost

into tangible cost and intangible cost. Tangible cost is hardware costs, labor cost, and

operational costs from employee training. Intangible cost is loss of customer

goodwill, employee morale and operational inefficiency.

3.2 Operational feasibility Operational feasibility is a process of examining the likelihood that the project will

attain its desired objectives. The goal of this study is to understand the degree to

which the proposed system will likely solve the problem or take advantage for the

opportunities outlined in the system service request or project identification study. For

ATLAM, when SAP is implementing, it can fit the business model in ATLAM. As

ATLAM current is using system that cannot produce financial reports. Thus, when

ATLAM is implementing SAP, it can make the system be more efficient because SAP

allow complex segmental reporting.

But, Gopel has said that the implementing SAP system is about not only

change on technology, it also about a change in work processes, culture and habits.

The change is work processes and culture is hard because employee already familiar

with the work scope they do every day. In addition, it is about change mind in

employee for employee job roles that has been in their mind for few years. The

existing operations and support infrastructure of ATLAM cannot handle the SAP

system. It has show that the implementing SAP system has high risk in term of

operational risk and impact on ATLAM operation. So, the support from PETRA and

appropriate training is important in order to affected staff in ATLAM to make the

implementation be operationally feasible.

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3.3 Technical feasibility Technical feasibility understands the development organizations ability to construct

the proposed system. This analysis should include an assessment of the development

group understanding of possible target hardware software and operating environment

to be used, as well as system size, complexity, and group experience with similar

systems. As for ATLAM in implementation of SAP system, it is a must for identify

and evaluate whether SAP system will perform effectively, reliable and capability of

resources to utilize SAP system. In addition, the risk assessment to access technical

risk level of SAP system will be based on the following:

a) Project size

For implementing SAP system, it is said that it is a large project for ATLAM. As

Zulkifli who is Finance Manager also said that this is a unique and challenges on

implementing SAP system. As the large the project is, there will be a high risk on

the project. The project will have an impact for ATLAM when implementing it.

As the project is large and left limited time which is around 7 weeks for the

project team member to manage it, it will have high stress on it. The project team

member consists of five persons which is Sani as Project Manager, Gopal as User

Project Manager, Lim as User Representative, Kamal as Funtional Analyst and

Zulkifli as Finance Manager.

b) Project structure

For the requirement of SAP system project, it is highly structure and is well

define have a lower risk. When ATLAM is implementing SAP system, PETRA

group will provide applicable system to ATLAM. Even the user representative,

Lim whose is disagree and refuse for the implementation of SAP system, it still

need follow what have been decide because it is under control as ATLAM

management have highly commitment through the system.

c) Development group and User group

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When ATLAM implement SAP system, it will have two group of people related

to it’s which is development group and user group. The project will have a high

risk on the development group meanwhile the user will have low familiar with

the SAP system because never use it before. But, ATLAM can conduct training

for employee to reduce the risk of implement SAP system.

3.4 Schedule feasibility Schedule feasibility is consider the likelihood that all potential time frames

and completion date schedule can be met and that meeting these date will be sufficient

for dealing with the needs of the organization. For ATLAM, there should access

schedule feasibility before implement SAP system. Schedule should with the duration

of SAP system before it is fully implement at ATLAM. The gantt chart should be use

on schedule the activity that need complete within 7 weeks. Other than Gantt Chart,

the user and support infrastructure should available for feasible project scheduling.

The most important for them to deal with is the resistance of staff to change.

Other than Gantt Chart, a time frame also needed for implement of SAP

system that involve in 7 week. The scheduling risk should also evaluate for the

possibility of happen of improper function of SAP system since the project is lack of

time. Since the cost is significant, ATLAM staff should be prepared well to accept

SAP system.

3.5 Political feasibility Political feasibility is about understanding how key stakeholders within the

organization view the proposed system. This is due to an information system may

affect the distribution of information within the organization, and thus the distribution

of power, the construction of an IS can have political ramifications. Those

stakeholders not supporting the project may take steps to or block disrupt or change

the project intended focus. For ATLAM, the key stakeholder is their own staff. The

most important thing is to overcome the resistance change of ATLAM staffs. Because

staff is the parties whose will do their job with SAP system. If they refuse to change

will disrupt the project that implement.

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4.0 Capital Budgeting Analysis

Implementation of a new system is not a simple process. A company should have

proper planning before implementing a new system and consider whether it is a

desirable project that can bring benefits to the company. In this case, ATLAM plan to

upgrade its accounting system with the PETRA group-wide SAP system. So, ATLAM

has to plan and analyze to ensure that the implementation of SAP is feasible and can

bring maximum benefits to the company. To determine whether implementation of

SAP in ATLAM is a desirable project, we decide to perform a feasibility analysis in

capital budgeting.

Capital budgeting is the process of planning for purchases of long-term assets.

This technique focuses on cash flows rather than profits. This is means that it will

identify the cash inflows and cash outflows rather than revenues and expenses flowing

from the investment.

In order to determine whether ATLAM should implement SAP, we will do

some capital budgeting analysis which is including:

1. Initial Investment

2. After-tax Cash Flows for Years 1 through 6

3. Payback Period

4. Net Present Value (NPV)

5. Internal Rate of Return (IRR)

In this analysis, we assume:

Depreciation is 34% for six years based on reducing balance method.

Required internal rate of return is 25%.

Discount rate is 10%.

Marginal tax rate is 28%.

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4.1 Initial InvestmentInitial investment is the cost incurred to enter a project. It is important to understand

how much it cost to start and run a project in order to determine the feasibility range.

Below show the calculation of the initial investment that would incur by ATLAM in

the implementation of SAP:

Initial Investment RM

Hardware 2,000,000.

00

Initial software licence 1,000,000.

00

Training costs 1,271,550.

00

Customisation work 72,840.

00

Total 4,344,390.

00

The initial investment that need to pay for the implementation of SAP is

RM4,344,390 which is more expensive if compared to ACCPAC. Although the initial

investment is huge and it is impossible for ATLAM to bear the SAP implementation

costs, but it gives a lot of cost saving in term of accountant time and efficiency cost,

technical expertise cost saving and, process and procedures cost savings as well for

long-term period.

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Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Savings: RM RM RM RM RM RM

Accountant's time and efficiency - 400,000.00 800,000.00 1,200,000.00 1,600,000.00 2,000,000.00

Technical expertise cost savings 600,000.00 1,200,000.00 1,400,000.00 1,600,000.00 1,800,000.00 2,000,000.00

Process and procedures cost savings - 500,000.00 900,000.00 1,200,000.00 1,500,000.00 1,800,000.00

Working capital savings 900,000.00 1,200,000.00 1,500,000.00 1,500,000.00 1,500,000.00 1,500,000.00

Total Savings 1,500,000.00 3,300,000.00 4,600,000.00 5,500,000.00 6,400,000.00 7,300,000.00

Costs:

Average SAP licence cost - 150,000.00 200,000.00 225,000.00 250,000.00 250,000.00

Cost to convert old data to new data 100,000.00 160,000.00 180,000.00 560,000.00 600,000.00 640,000.00

Cost of overheads 300,000.00 420,000.00 490,000.00 560,000.00 600,000.00 640,000.00

Cost of system maintenance and firewalls 60,000.00 120,000.00 130,000.00 140,000.00 150,000.00 160,000.00

Cost of hardware expansion - 260,000.00 300,000.00 340,000.00 380,000.00 400,000.00

Cost of training 500,000.00 800,000.00 900,000.00 1,000,000.00 1,100,000.00 1,300,000.00

Total Costs 960,000.00 1,910,000.00 2,200,000.00 2,825,000.00 3,080,000.00 3,390,000.00

Earnings before tax and depreciation 540,000.00 1,390,000.00 2,400,000.00 2,675,000.00 3,320,000.00 3,910,000.00

Depreciation cost (34%) 1,477,092.60 974,881.12 643,421.54 424,658.21 280,274.42 184,981.12

Net book value after depreciation 2,867,297.40 1,892,416.28 1,248,994.75 824,336.53 544,062.11 359,080.99

Earnings before tax (937,092.60) 415,118.88 1,756,578.46 2,250,341.79 3,039,725.58 3,725,018.88

Tax rate (28%) (262,385.93) 116,233.29 491,841.97 630,095.70 851,123.16 1,043,005.29

Earnings after tax (674,706.67) 298,885.60 1,264,736.49 1,620,246.09 2,188,602.42 2,682,013.59

Depreciation reversal 1,477,092.60 974,881.12 643,421.54 424,658.21 280,274.42 184,981.12

After-tax cash flows 802,385.93 1,273,766.71 1,908,158.03 2,044,904.30 2,468,876.84 2,866,994.71

4.2 After-tax Cash Flows for Years 1 through 6

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The after-tax cash flows for the implementation of SAP is RM 802,385.93 in year 1,

RM 1,273,766.71 in year 2, RM 1,908,158.03 in year 3, RM 2,044,904.30 in year 4,

RM 2,468,876.84 in year 5 and RM 2,866,994.71 in year 6.

4.3 Payback PeriodPayback period is a method that estimates the amount of time required for the cash

flows generated by the investment to repay the cost of the investment. This analysis

provides insight into the liquidity of the investment. An investment with shorter

payback period is preferred.

Year Cash Flow Cumulative Cash Flow RM RM0 (4,344,390.00) (4,344,390.00)1 802,385.93 (3,542,004.07)2 1,273,766.71 (2,268,237.36)3 1,908,158.03 (360,079.33)4 2,044,904.30 1,684,824.97 5 2,468,876.84 4,153,701.81 6 2,866,994.71 7,020,696.52

Recall the initial outlay is RM 4,344,390.00. Up to year 3, the accumulated

cash flow is RM 3,984,310.67. Hence, it is requires RM 360,079.33 which is show at

the calculation above to cover the initial investment.

To determine the remaining period:

Therefore, the payback period for the implementation of SAP is 3.18 years.

This means that ATLAM will be able to recover the cost of initial investment for SAP

in 3 years and 3 months which the cash flows generated by SAP equal to its initial

investment, RM 4,344,390. This also shows that ATLAM can move into profit and do

not need to bear the cost of implementing SAP after 3 years and 3 months.

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Payback Period = 3 + (Balance left in year 3 / Cash flow in year 4)

= 3 + (360,079.33 / 2,044,904.30)

= 3 + 0.18

= 3.18 years or 3 years and 3 months


4.4 Net Present Value (NPV)NPV gives a truer picture of the profitability of a potential investment by explicitly

taking into consideration the size and timing of all cash flows associated with the

proposed investment. It involves discounting a stream of future cash flows back to its

present value. According to (A.Ross, D.Jordan, & Mazlan, 2007), an investment

should be accepted if the value of net present value is positive and rejected if it is

negative.

Year Cash Flow PVIF Present Value RM 10% RM1 802,385.93 0.9091 729,449.05 2 1,273,766.71 0.8264 1,052,640.81 3 1,908,158.03 0.7513 1,433,599.13 4 2,044,904.30 0.6830 1,396,669.64 5 2,468,876.84 0.6209 1,532,925.63 6 2,866,994.71 0.5645 1,618,418.52

Total Present Value 7,763,702.77

Net present value (NPV) = RM 7,763,702.77 – RM 4,344,390.00

= RM 3,419,312.77

The present value is RM 7,763,702.77 and the initial outlay is only RM

4,344,390.00, hence the net present value is RM 3,419,312.77. Based on the

calculation above, the value of NPV is positive. This illustrate that SAP is desirable to

implement in the company.

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4.5 Internal Rate of Return (IRR)Internal Rate of Return is the rate of return from the capital investment. In other words, IRR is the discount rate that makes NPV equal to zero.

With the NPV analysis, the IRR can be compared to a required rate of return to determine whether the company should accept the investment.

An investment with IRR that greater than required rate of return may be accepted while it may be rejected if IRR less than required rate of

return.

By using trial and error method:

25% 27% (Rate 1) 29% (Rate 2)Year Cash Flow PVIF Present Value PVIF Present Value PVIF Present Value

RM RM RM RM

0 (4,344,390.0

0) 1.0000 (4,344,390.00) 1.0000 (4,344,390.00) 1.0000 (4,344,390.00

)

1 802,385.9

3 0.8000 641,908.74 0.7874 631,799.94 0.7752 622,004.6

0

2 1,273,766.7

1 0.6400 815,210.70 0.6200 789,736.94 0.6009 765,438.8

0

3 1,908,158.0

3 0.5120 976,976.91 0.4882 931,543.58 0.4658 888,884.2

4

4 2,044,904.3

0 0.4096 837,592.80 0.3844 786,064.36 0.3611 738,438.1

9

5 2,468,876.8

4 0.3277 809,001.56 0.3027 747,275.63 0.2799 691,115.8

8

6 2,866,994.7

1 0.2621 751,565.46 0.2383 683,289.22 0.2170 622,140.7

2

487,866.18 225,319.67 (16,367.56

)

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Based on the calculation above, the investment in SAP is feasible because the internal rate of

return is 28.86% which is greater than the required rate of return of 25%. Thus, this project is

acceptable.

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Interpolation:

Rate 1−IRRRate 1−Rate2

= NPV 1−0

NPV 1−NPV 2

27−IRR27−29

= 225,319.67−0

225,319.67−(−16,367.56)

27−IRR−2

= 225,319.67241,687.23

27−IRR−2

= 0.9323

27 – IRR = -1.8646

IRR = 27 + 1.8646


5.0 Gantt Chart

A gantt chart is a horizontal bar chart developed as a production control tool in 1917 by Henry L.

Gantt, an American engineer and social scientist. Frequently used in project management, a

Gantt chart provides a graphical illustration of a schedule that helps to plan, coordinate, and track

specific tasks in a project. Gantt charts may be simple versions created on graph paper or more

complex automated versions created using project management applications such as Microsoft

Project or Excel.

From this case, we are using excel as a tool to create ATLAM gantt chart. The

reason we choose this tool since by using excel it is more affordable rather than use a

software like smart sheet which will be costly toward company.

AKADEMI TEKNIKAL LAUT MALAYSIA (ATLAM)GANTT CHART

SAP SYSTEM IMPLEMENTATION

Task Start Date Duration(days) End Date

Develop SAP workplan and budget 22/01 5 26-Jan-02Forming SAP development team and executive 24/01 3 26-Jan-02Perform Feasibility study of SAP and capital budgeting analysis

26/01 6 31-Jan-02

Configuration of new SAP system 31/01 15 15-Feb-02Pilot Testing 15/02 5 20-Feb-02Training employee 20/02 5 25-Feb-02Implement within organization 25/02 30 26-Mac-02Prepare Analysis Report 26/03 7 01-Apr-02

Develop SAP workplan and budgetForm SAP development team and executive

Perform Feasibility study of SAP and capital bugeting analysisConfiguration of new SAP system

Pilot TestingTraining employee

Implement within organizationPrepare Analysis Report

22/01 05/02 19/02 05/03 19/03 02/04 16/04

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Based on the above table, we already show steps that involve in ensuring the

successful implementation of SAP. The Gantt chart above constructed with a horizontal

axis representing the total time span (days) of the SAP implementation project in each

task and a vertical axis representing the tasks that make up the SAP implementation

project. There is 8 step involve in this project which is first is they have to develop work

plan and budget. This task take about 1-5 days to finish and next is follow by forming

SAP development team and executive which will handle this project and person to refer

to. This takes about only 1-3 days and then they must perform feasibility study of SAP

and capital budgeting analysis to get understanding regarding SAP which takes 1-6 days.

After that they have to make a configuration of new SAP system to ensure that the

system able to give best benefit and suitable with the current operation in the

organization. It takes 1-15 days to finish it. Next, the most important task that needs to be

done is pilot testing to ensure that this system can be run and able to increase top

management trust toward the decision. It only takes 5 days and same with training

employee task. This task is needed, so all of these people will have required SAP

knowledge and skills or even SAP certifications.

Then, the system that already complete will be implement stages by stages within

organization which takes the longest period which is 1-30 days. This is to ensure that the

system can be implementing successfully. Last step is preparing an Analysis Report to

give feedback regarding new system toward top management which only takes 1-7 days.

The time frame is from 22 January 2002 and must be finished before 1 April 2002.

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6.0 Is Termination Lim is a Right Decision?

Zulkifli Osman is the Financial Manager in ATLAM since 1995 while Lim is User

Representative in the discussion about the new system upgrade. When having the meeting for

discuss the implement SAP as ATLAM new accounting system, Zulkifli and Lim have different

opinion. Zulkifli believed the implementation of SAP is better than ACCPAC but Lim strongly

disagree with this opinion.

Lim thinks the SAP got a lot of weaknesses while the ACCPAC can bring benefits to the

company. Lim argues the implement of SAP costs the company a lot (include the

implementation costs and accompanying operational costs). Company are unable to afford the

costs due to the deficit in year 2001. Besides that, Lim also argues that the SAP is suitable for

manufacturing industry but not education industry. Additional, lack of resources (PCs) in

department and staff there are lack of PC’s knowledge and skills also make the SAP impractical

in ATLAM. However, Zulkifli strength with his opinion and conclude the SAP will be

implement in the company because even SAP involved unique risks and challenges, it also bring

benefits to the company.

In the case SAP for ATLAM, Zulkifli was terminate Lim from the project team because

Zulkifli thinks Lim is a time waster and the time waster cannot be in the project team. Other than

that, Zulkifli terminate Lim because Lim raised too many issues when having the meeting and

Lim was bring too many questions that justify the reliability of the SAP system. Zulkifli was

afraid that Lim would influence the others with his views.

Zulkifli terminate Lim is a wrong decision because Lim was contributed a lot when

having the discussion. Lim is very experienced and he brought the issues that are important and

should be take into consideration. Zulkifi cannot simply terminate Lim because Lim has some

specify knowledge that other people don’t have. If Zulkifli terminate Lim because Lim disagree

with his opinion, the staff wouldn’t contribute their opinion in the other meeting because they

will scary the thing happen in Lim will happen for them also. Zulkifli become autocratic, so even

decision by Zulkifli was wrong, no people will speak out. This will give the serious effect to the

company.

7.0 How to Overcome Staff Resistance

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To ensure that SAP system can be implementing in ATLAM, Zulkifli need to confident all the

staffs that SAP system will help them in the term of business process and all transaction will be

more effective and efficient. This is because when a company wants to implement changes in

business process and job duties, the most resistance that need to overcome is from the staffs or

the users of SAP system. There are a few ways on how to overcome the staff resistance.

i. Communicate Early

Before implementing the SAP system, Zulkifli first and foremost need to communicate

with the ATLAM’s staffs. This is because human is the element has to be a key part of

the SAP system project planning. Managers have a tendency to underestimate how

upsetting this type of change can be. Zulkifli should begin preparing the staffs for a major

change months before, not when it’s occurring.

ii. Communicate Often

Change is difficult for people to accept especially when it involves areas of expertise and

prerogative. That’s why Zulkifli and the other steering committee need to make sure they

are being as open as possible and communicating consistently about what’s happening.

Newsletters, town hall meetings and email updates are just a few of the tactics they can

use to make sure ATLAM’s staffs are well informed, and the rumor mill isn’t taking

over. Other than that, Zulkifli also need to seek their feedbacks.

iii. Explain What’s in the SAP System For Them

It is important to explain why SAP system need to be implemented and discuss how it

will affect ATLAM’s staffs. Focus on how the changes will improve the company’s

performance and help ATLAM’s staffs perform their work. At the same time, Zulkifli

shouldn’t shy away from talking about the bad and the ugly. If it will make things more

difficult for individual ATLAM’s staffs, consider offering incentives or additional

support.

iv. Ensure Management Buy-In

A successful technology implementation starts with the whole-hearted commitment of the

steering committee. Therefore, Zulkifli need to have the motives for implementing the

SAP system. Then rally the support of your managers and the steering committee. This is

because, during the implementation, there will be lots of room for interdepartmental

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discord. Therefore, Zulkifli need to make sure that everyone is all pulling in the same

direction and delivering the same message.

v. Provide Adequate Training

Not all ATLAM’s staffs are savvy about technology. Therefore, to implement SAP

system into ATLAM, it needs to have effective communications and high quality

training. Training is a must for ensuring that ATLAM’s staffs cope well with the changes

and make a smooth transition to the new order.

vi. Get Them Involved

Every system such as SAP has many users that will use the system. One of the ways to

overcome the resistance in ATLAM is by involved the key users in the steering

committee. Ask for their opinions on the system requirement and then involve them in

system demonstrations. Not only will you be benefitting from their expertise, but you will

be bringing them on the side. They can even be your champions, helping fellow

ATLAM’s staffs become comfortable with the new technology.

vii. Block the Exits

Once the project director of SAP system had communicated with the ATLAM’s staffs,

sought their feedback, it’s time to proceed. This means that any requirement requests

from the users will be vetoed. It is necessary to achieve a successful implementation of

SAP system into ATLAM. Other than that, if there to be any changes during the

implementation it will increase the duration of time and increase the cost.

8.0 Conclusion

After we do for the analysis and evaluate the usefulness of SAP system project, we recommend

that ATLAM should implement the SAP system as soon as possible. The implementation of

SAP system would bring a lot of benefit for ALAM in the long term view.

From the discussion, we can conclude that SAP should be implemented in ATLAM due

to several perspectives. First of all, the calculations of after-tax cash flow are positive in these 6

years show that this system will generate more cash than the cost of its initial investment.

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Besides that, the net present value shows a positive value and the implementation of SAP

systems requires 3 years and 3 months only recovering the initial investment which is acceptable

due to the useful life is 6 years. In addition, the internal rate of return is 28.86% which is greater

than the required rate of return of 25% shows that the company should accept this project.

Hence, we can conclude that it is feasible to carry on the implementation of SAP system in

ATLAM as the benefits of implementing the system exceed its cost.

In the case of SAP for ATLAM, issue Lim was having conflict with Zulkifli in the

SAP implementation matter. In our group opinion, when a team has difference of opinion

to resolve this conflict requires a lot of respect and patience from both side. We hereby

recommend that Zulkifli must make the best decision to maintain the expertise in their

organization.

Zulkifli need to resolve the conflict in good manner. He needs to prepare for the

solution first by acknowledge the conflict and find ways to communicate and discuss

with Lim properly. Then Zulkifli need understanding the situation by clarify Lim

positions, and also need to make assumption if they in Lim side.

Last but not least is in preventing conflict, the teams can be used such skill and

behaviour that very work on, such as dealing with conflict immediately, being open,

practicing clear communication, practicing active listening, not letting conflict get

personal, encouraging different points of view, not looking for blame, demonstrating

respect, as well as keeping team issues within the team.

Lastly, Lim is expertise person in organization and as a good asset to ATLAM, we are not

suggesting Zulkifli to kick Lim out from the project team.

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Case 7 Complete

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Transcript of Case 7 Complete