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Question: Discuss about the ERP and its Implementation. Answer: Introduction Enterprise resource planning is a management system that covers different areas of an enterprise from human resource department to logistics. It is basically a process through which a company manages and integrates core activities of its business. In this report, a detailed discussion is done about the reason for adopting ERP and types of industry making increasing use of it. Some of the reasons are that with help of this software, entities will be able to standardize their business practices, improves their performance in down economy, help in solving IT issues and many more (Rajan and Baral, 2015). It also explains the implications of Sarbanes-Oxley Act on MySAP ERP software followed by the success and failure stories in the implementation of ERP system along with the reasons for the same. SOX is a law passed by U.S congress in 2002 with an objective of protecting the investors from the fraudulent accounting operations done by corporation. The companies which have implemented or go ing to implement ERP software in their business is required to comply with the requirements of this act. During this course of action, ERP implementation faces many challenges which are discussed in this report later. Many companies successfully implemented it whereas many failed doing so. The report ends with the conclusion summarising the results of discussion. Reasons for adopting ERP software In todays era, almost all large organizations have adopted this system and the medium and small sized companies are increasingly following the trend. The reasons for this growing adoption are classified into following two categories: Technical reasons The need of new information technology stimulated the acquisition of ERP software in the companies. This new technology mainly focuses on supporting the current way of doing the business. Some of the reasons are: The need to replace the old IT technology with the more advanced and modern one was one of the reasons for its adoption. Cutting down the IT cost and standardization of technology was one of the reasons. By reducing the cost of IT, enterprises are able to lower the maintenance and support cost, resulting in increased efficiency and capacity. ERP system was the solution for euro conversion problems and year 2000 problems. An increasing desire to connect all groups companies into same network, arises the need of adopting this software (Hallikainen, Laukkanen and Sarpola, 2004). Business reasons The desire to bring changes in the working of business by bringing new technology raises the need for adopting ERP system. Due to this new IT is needed not only to reduce the cost but also to modify the working of business in order to achieve strategic goals. Some of them are: The most reported reason was integration and data visibility which aid to managerial decision making process. Globalization of business and standardization of IT systems triggered the ERP initiative in most of the companies. Re-engineering the business process and wish to adopt best practice business models for future development. Desire of electronic commerce, networking and collaboration was one of the reason for agreeing to new ERP system (Hallikainen, Laukkanen and Sarpola, 2004). Increasing use of ERP by industries Enterprise Resource Planning is that software which is applied and used by almost each and every industry. Among the countless, the type of industries most benefited from it are retail, manufacturing, agriculture and real estate. Retail The essentials of retail industry are sales and payment. To facilitate them, it is very important to have a control over the inventory management functions along with the tracking, shipping and marketing of products. Through installing new ERP software, all the data related to orders can be coordinated across various retail stores. Orders which are placed and dispatched can be tracked based stock and non-stock items and real time updates on inventory. Sales management can also be done through advanced pricing (Cloud Tech News, 2014). Manufacturing The companies operating in this industry uses ERP the most. Because of their size and complex organisational structure, it is very necessary for them to integrate and standardized all their business activities, in order to maintain its competency. Once the system is established and data is integrated, it will become easier to track the financial part of the industry through product costing and manufacturing accounts. Also, the connectivity of information across multiple departments through ERP, results in increased productivity and decreased data errors and manipulations (Singh, Singh and Kaur, 2017). Agriculture It is the only sector which highly depends upon the weather. Further, this industry has acres of land on which numerous type of crops can be grown. ERP provide solutions for tracking and planning of the information related to harvesting, crop maturation and type of lands (Verdouw, Robbemond and Wolfert, 2015). Real estate The construction and management of industrial and commercial real estate is efficiently streamlined through ERP solutions for Real Estate Management. The use of ERP solutions in this industry will stimulate efficient property and entity management as well as accurate tracking and budgeting of existing property data and revenue forecasts (Cloud Tech News, 2014) Sarbanes-Oxley Act Reasons and Implications SOX Act 2002 is passed by U.S. congress to protect investors from accounting fraud. It requires the corporate executives to check and certify the accuracy of financial statements personally (Soxlaw.com, 2018). The reasons for passing this act were accounting scandals at WorldCom, Enron, Global Crossing and Arthur Anderson. These corporate outrages resulted in billon dollars losses of corporates and investors which negatively impacted financial markets and overall U.S economy. The key implications of the act are: Section 302- Corporate responsibility for financial reports: As per this section, CEO and CFO are obliged to be accountable and responsible for the accuracy in financial reports. The section requires both the officers to be responsible for deploying internal controls that provides timely reporting of the changes in reports along with the transparency and accuracy (Fraser, Simkins and Narvaez, 2014). Section 401- Disclosure in reports: It requires the companies to fully disclose all the information in the periodic reports (Sarbanes-oxley-101.com, 2018). Section 404- Management Assessment of Internal Controls: It defines the measures of internal control and also enables the companies to conduct an audit for checking the effectiveness of the internal controls used by the company (Stein, 2012). Section 409- Real time disclosure: The companies are obliged to do real time disclosures of the changes occurring in financial situation due to the material changes in the business (Sarbanes-oxley-101.com, 2018). Section 802- Criminal Penalties for modifying documents: Defines penalties for the enterprises involved in alteration of financial reports and audit results. Section 806- Whistle-blower protection: Give powers to the employees to report about any fraudulent activity practiced in the organization (Sarbanes-oxley-101.com, 2018). MySAP ERP meeting the implications MySAP ERP is designed on the basis of industry best practices that meet and support companys needs. ERP SAP software enables the companies to comply with SOXthrough automation tooling and industry standard process. It contains an internal control management sub module which helps the enterprises to identify improvements in their control process and also the documentation of internal control. It provides a dashboard and management reports which assists corporate executives in checking the condition of internal and accounting controls used. This ultimately helps in establishing SOX compliance for section 302 and 404 (Sens, 2010). MySAP has a fully configurable accounting and financials module that help the companies to bring flexibility in their organization and reporting structure. The general ledger made in MySAP ERP provides full transparency and disclosure and is available in such a manner that, multiple reports can be generated through one source of information. It also help the companies to report periodically, accurately, timely and have transparency in them which ultimately complies with the section 302, 401 and 402 of SOX act (Okungbowa, 2015). The software also contains a sub module for taking into account the whistle-blower complaints. It empowers the employees to notify about the irregularities in accounting practices, directly to the audit committee through an electronic form. This ensure that the policy of whistle blower is been followed with ease resulting in compliance with SOX section 806. Further, in order to comply with section 802 of criminal penalties, SAP organizes stronger internal controls and segregates the duties that restrict the users to one specific roles in the system. This prevented the data from being misused and reduced the conflicts (Ferran and Salim, 2008). Success and Failure of implementation MySAP ERP ERP implementation success- Cadbury A British multinational confectionery, Cadbury has its headquarters situated in London and the company operates in more than 50 countries across the world. It chose to bring ERP in the business for keeping the pace with the faster growing economy. The company was on vertical growth and wanted to match with the fast-pace growth of economy (Cadbury.co.uk, 2018). Implementation Plan The process started from scratch and management tried to indulge best practices of the company and strengthen the previous systems in new ERP system. The initiative was taken to integrate all the major business processes which include finance, human resources and other departments. It chose to implement SAP ERP 6.0 software. (Erpfocus.com, 2017). Cadbury adopted a big bang approach and make the implementation company wise. The company partners with IBM and Siemens in order to align with different vendors. It chose the function based on big bang approach and then the whole module was implemented across the company within a period of 1 year. The process was completely driven by top management and it tried to synchronize all the phases into one phase and implemented big bang method (Erpfocus.com, 2017). Phase 1: preparation of project which includes hiring of members, project orientation, select system integrator and many more. Phase 2: design and requirements in detail. Identification of risk associated, measures for business improvement, finalizing the road map and so on. Phase 3: activities related to configuration and testing of the systems. Phase 4: end-user training, final training program and cutover plan, informing external partners and DIL tests. Phase 5: executing and monitoring all the system and processes. The motive of choosing big bang approach was to cut off the integration cost at time of execution. Outcomes of the Project Installation of ERP software added efficiency and help Cadbury to achieve fast paced growth. It provided a new way of managing warehouse system and a more organized structure at branch offices. The company got a huge benefit of saving cost and strengthening past systems during implementation phase. It was a whole internal process restructuring which led to the increase in the efficiency. Reasons for success The main reason for success was, the company gave sufficient time for implementation and also applied all the phases required. It properly tested all the systems implemented and then adopted a big bang approach to save the integration cost. Unlike Hersheys, Cadburys strategy for conducting implementation of ERP was much better which resulted in many benefits to the company ERP implementation failure- Hersheys The Hershey Food Corporation, commonly known as Hersheys is the leading manufacture of chocolate in North America having its headquarters in Hershey, Pennsylvania. It is one of the oldest chocolate companies operating in United States. The need for implementing ERP arises when it decides to price its products low and to achieve a billion sales target. To fulfil this desire, an efficient logistics and supply chain management system is required duly supported by IT. Earlier, like many other companies, Hershey was also using several legacy systems used for performing its various functions (Hersheys.com, 2018). Implementation plan An approval for the project named Enterprise21 was received by the management of Hershey during late 1996. The main aim of the project was to improve and standardize the hardware and shift to client/server environment. For this, the company chose SAP AGs R/3 ERP, a product in MySAP product suite as well as the companion software from Manugistics and Siebel. The SAP software consists of modules for materials management, purchasing, ordering, finance, billing and warehousing. Shifting to ERP system, provided company with a client-server version and it uses IBM Global Services in order to integrate the software offered by three various vendors. The time recommended for implementing the project was 4 years, but the company wanted to get it completed within 2.5 years. Some of the modules of SAP were implemented by the end of January 1999 and some were behind the due date. These modules were added on only in July, three months behind the schedule. This was the time when Hershey was not able to extend its implementation program because of the increasing Y2K problem. Retailers started pouring the orders for Halloween during the period. Management then decided to choose Big Bang approach instead of phased approach for ERP implementation. This means that the software will be implemented directly rather the installing and testing modules one by one. This was done in order to meet its Halloween orders (Madu and Kuei, 2005). Outcome Expected VS Actual Expected outcome Actual outcome Better coordination in the product delivery, enabling the retailers to maintain low inventory, decreasing the cost of holding inventory and offering better customer services. Problems related to the timely delivery of orders started arising, various consignments were shipped behind the due date and many of the deliveries were incomplete. The purpose of this project is to enhance the competitiveness and customer service. Hersheys distributers were finding it difficult to supply products to the retailers within the deadline and as result; they lost their credibility in the market. It was expected that the new software will help the management to reorganize their business process. Instead of reorganizing the process, it turned out to be a great failure. The company started losing its customers, its sales were getting affected and inventory started piled up in the warehouses. Adjusted deliveries to the suppliers, upgraded process, efficient customer services and reduced inventory cost. The company was not able to fulfil many of its orders and the issues in business process created operational paralysis leading to a decline in the profits. Reasons for the failure For the sake of convenience, the company avoid testing the systems, as a result of which data and system integration issues remains unchecked. In Hersheys case, many people criticized the approach used by company and the reason of the failure was, not undertaking system testing, data migration and training. This is point where Hershey lack in its whole implementation process (Pemeco.com, 2013). Another mistake was over squeezing of scheduling time. Hershey tries to finish the whole implementation project in an unreasonable span of time. Moreover, its cutover activities and Go-Live session was scheduled during its busy season. The employees were not trained enough to operate and deal with the new system and processes (Pemeco.com, 2013). Other reasons cited for the failure were lack of experience to Hershey in implementing system software at large scale and inefficiency of top management. An analyst had citied that the company had used ERP as a justification for low earnings (Kapp, Latham and Ford-Latham, 2016). Conclusion From the above report it can be concluded that Enterprise Resource Planning is very essential in todays scenario. Every company should properly strategize for implementing ERP software in its business so as to stimulate the overall development of the organization. Through ERP products, businesses can standardize their activities and also boost up their efficiency, in order to meet their technical and business desires. Although there has been many case studies, out of which two are explained in the above report, regarding the failure and success of ERP but if the implementation process is carried out properly and company has appropriately strategized, then it can avail the benefits from the new system. References Cadbury.co.uk. 2018.Cadbury Chocolate. [online] Available at: https://www.cadbury.co.uk/ [Accessed 8 Feb. 2018]. Cloud Tech News. 2014.The 4 big industry applications of ERP software. 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