Success Factors for Successful Implementation of an SAP System with regards Accounting and Finance - Term Paper Example

SAP Student’s Name Institution Affiliation Introduction SAP is an enterprise resource planning (ERP) system and has been one of the most popular business system that various organizations have benefited from due to its seamless communication and real-time capabilities. But, it must be noted that not all ERP implementation have been completely successful. ERP implementation affects the whole organization therefore given such a complex process that involves people and different cultures there are number of challenge that the organization may face during its implementation. Recently, there has been a growing trends among many companies of replacing their legacy system with new ERP system such as SAP that helps in improving management and administration. This report critically analyses the adoption of SAP systems in business organizations and discuss accounting challenges and benefits in an SAP environment. The report will examine previous studies that determine critical success factor as well as risk factors in implementing an ERP in an organization. Specifically, the literature will focus on the organizational dynamics that are involved in its implementation by using CSFs and the Miles and Huberman (1994) three phase framework that include precursor condition, implementation process and the corresponding outcomes. The research will also use finding from case studies to access SAP readiness and CSFs fulfillment. The outcomes of this report will help in contextual understating of the unique challenges in SAP implementation in a corporate environment. SAP and its Functionalities SAP application is a software used by big and mid-sized companies to offer the most effective business focus and allow for the creation of excellence and innovation. The application of this foundation allows on to create a dynamic business process that will prove effective. SAP acquires from over three decades of experience to about 45,000 clients all over the world. It has the ability to provide a strong functionality, global orientation and dynamic enhancement option one needs to acquire a sustainable, competitive stance and place the company better for profitable development. Similarly, it is able to offer support to varied forms of automated, end-to-end processes that are necessary to remove company-based issues and increase the company’s processes to partners, distributors, and clients (Chen, 2007). With SAP, companies are able to manage the resources across functions and places, leverage company skills and accord clients with reliable experience in varied services offered like text and voice (Chen, 2007) For most companies, the creation of profit in the modern business setting is quite complicated. There is notable competition from several companies in the world, talent decline and web services. Users also able to create and control new processes and virtual teams that connect people from varied places, skills, and devices to align with the needs of the clients affordably and efficiently. SAP gives businesses to manage an inbound contact center. This is through running an inbound contact point that answers to issues raised by clients. For the agents, irrespective of their location, they are able to access and manage communication elements using web services (Chen, 2007). Lastly, it is able to accord managers monitoring, reporting and quality evaluation functions necessary to improve on business decisions, constantly enhance agent efficiency, and support future process growth. The SAP also allows companies to operate an outbound contact center. Here the company is able to put in place, implement, and effective process in all areas. It is able to limit redundant work through integrating outbound calling projects into a single process. Lastly, it is able to give company management with ability to report, assess, and make better company decisions that will allow enhance company performance and development. Additionally, SAP offers a company-wide communication management that offers an all-IP communication for communication aligned businesses. This is irrespective of the networked station or device in the world. (Chen, 2007) Lastly, it allows for reporting function where the company is able to monitor and manage the communications, change communication-based businesses as required and manage several areas as a unit and accord companies with an integrated business focus. Comparison of Epicor Enterprise and SAP in Financial Management Solution Both Epicor and SAP offer varied forms of functionalities in financial management. As noted, there are those areas that are similar like in giving the end user with quality services. Epicor ERP helps commercial companies and their departments to acquire maximum benefit in their valued resources. This allows them to acquire profitable growth and become accessible for companies (Chen, 2007). For instance in manufacturing, distribution and retail services among others. For SAP solutions, they are useful for companies of all sizes in managing costs and acquire flexibility necessary to react to varying business needs. Epicor ERP is a solution that allows companies to strategize, implement, and assess the whole company. With close to 20,000 companies, Epicor allows for implementation for proven strategize and tools that will give a company the ability to manage easy processes for the management and allow for the control of complexities arising form make-to-order manufacturing. On the other hand, SAP incorporates 30 years of experiences to provide solution that controls the activities of processing companies through offering functional and dynamic system. The system is a proven method is easy to use and allows clients to implement updates into their systems (Chen, 2007). Lastly, SAP offers users with the ability to offer a fast access to useful business information, which accords companies with the ability to operate in a more effective manner. Challenges of SAP implementation in Accounting SAP challenges are not unique but are common to all ERP implementations. SAP has had significant growth in the past decade, but there are a number of challenges that organization may encounter when implementing an accounting system. According to Dillard and Yuthas (2006) despite the growth of the number of large-size companies using SAP and a number of small and midsize companies adopting SAP some SAP implementation are not successful. This implementations often have a delays and budget overruns (Helo et 2008). Other research has gone to show that SAP implementation have seriously failed to achieve the organizational goals and the expected desired outcomes. However, much of the research showed that the SAP failure in its implementation was not as a result by the software but rather the complexity and the massive changes that occurred within the organization ( Helo et al, 2008). These failure in its implementation can be explained through the fact that SAP implementation forces organization to follow a certain prescribed “best practices” and where it has been successful it form an appropriate case study. Helo et al cited that unlike other information system SAP implementation are different in that they are not entirely related to technology issues but rather the organizational culture and human issues to resist change. Hang et al (2004) presented a number of risk factors that cause ERP implementation to fail According to Le et al (1996) these risk factors form aspect that organizations need to consider before carrying out an implementation of an ERP system. The implementation of SAP cause organization changes and therefore requires the input of senior managers to help resolve conflicts when they arise. Without this clear cut commitment of executive management, SAP implementation risk failure. To but this bluntly, changes in business process across an organization or a department, there can be a lot of resistance to the adaptation of a SAP system. SAP connects seamlessly and integrates all business function within the entire organizations. Consequently, management should be committal and specifically equip employees with necessary resources and clear channels of communication of its progress. On the other end, lack of the end user training runs the risk of inaccuracies and confusion therefore, decreases user satisfaction and credibility. A successful implementation of an ERP system requires an excellent project manager. The implementation team should have clear instructions and guidelines on how to execute the project from the project requirement and the project schedule to their resource allocation. Thus, without proper planning and a good project manager, the SAP implementation may end-up taking longer time and may end in failure. Moreover, the composition of the team member play a vital role in SAP implementation. As discussed before SAP integrates different business functions within the organization into one central systems creating one complex software. If the project team does not comprehend the changes in the organization processes, strategies and structures from the SAP implementation. The organization will be in no position to benefit or gain from its competitive advantage. Therefore, in order to get the best out of an ERP implementation the team must strike a balance between the business experience within the organization and consultant with expertise in SAP. From this vantage point project management is like an iron triangle as illustrate below (Lamers, 2002). Lastly, in SAP implementation both cost and schedule tend to be underestimated, while scope overestimated (Aiken 2002). Challenge is that SAP change the entire organization through reengineering business processes. Therefore, after its implementation is almost impossible to revise the previous process. It is necessary that SAP requirements are accurate, holistic and systematic to the entire implementation process (Aiken 2002). Despite this challenges implementing SAP to the organization has numerous benefits. These benefits have encourages firms to adopt SAP systems such as increasing operation efficiencies and decreasing cost (Fisher, 2006). Statically speaking many of the Fortune 500 companies use SAP system both internally and for their daily operation and reporting. Over time many organization have realized the deficiencies of their information system. Legacy system are made of standalone units of automation that are seamlessly separated for other core business needs. For instance there maybe system that handle general ledger, revenue processes and another that handles the manufacturing process. But, data needs to be exchanged between these different systems in order to generate a single report that various department needs to run their operations. This becomes very difficult with legacy information systems. Additionally, even errors or inconsistencies are in-between different sub-system these flows into the consolidated process and management report are often skewed. However, SAP system are designed in a manner that integrates the entire organization to one system. This enables transaction to be process for one end to the other and eliminates data inconsistencies between sub-systems. Therefore, many organization have seen it prudent to replace their legacy business system with the best ERP package which is SAP. The benefits of using a SAP are enormous. SAP offers a system that is modern and highly efficient. In addition, the support infrastructure is unparalleled in the industry. SAP is design in a manner that is industry specific and addresses the needs of the organization. In summary, the main benefit of using SAP is that the organization is able to get a comprehensive set of integrated solution, business process and cross functions meshed into one software. Benefits Improve productivity and Insight The productivity improvements that come from SAP use can be great. Information is once. There exist no sub-systems to combine and authenticate. Information is forwarded to other companies by effective workflows with the help of emails and SMS among others. The verification of operations are sent for processing (Le, 1996). The staff is able to process several services on their access terminals. This can comprise of leave applications and submission of expense issues. The operating and analytics setting is improved to a point that allows for operation control. Affordability by allowing for flexibility To improve process standardization, efficiency, and adaptability, SAP is dependent on company service model. SAP improves its business setting by extending its operations, data and collaborative roles. Limitation of Risks SAP is able to manage complex issues in the modern day with SAP; it is a trusted service model for a long period due to its level of experience for companies in varied parts of the world. Improve Financial Control and Management Financial and management functionalities when combined to offer functionality to a business allow SAP users to acquire an inner form of visibility into their companies. Additionally, SAP improves profitable levels that allow financial management and risk control (Le, 1996). Gain Higher ROI A company is able to implement SAP with the help of rapid-implementation methods, which are affordable what past methods cost. It is also possible in some instances for enterprises to limit implementation time and period through leveraging on set defaults and versions available for precise companies (Le, 1996). Maximize IT Spending SAP combines and uses business procedures and limits high integration prices and the desire to buy third party based software. The application of SAP allows for progress and gradual rise of cash and limits the possibility of companies to borrow money. In the case of Nepalese, SAP has been able to offer notable progress for the company. For the liberalized company, it is able to bring about effective business tendencies that meet the needs of the customers (Le, 1996). The processes are effective and allow for these companies and their respective departments to enhance their operations. Literature Review of Critical Success Factors for SAP Adoption in Finance and Accounting They are critical success factors that will ensure that a SAP software operates at it optimal. They are several researches and data available that show the critical success factor that contribute to a successful ERP implementation. Clemons (1998) Bhatii (2005) and Kale (2000) have presented researches on critical success factors related to ERP implementation. The above research can be modeled for a SAP ERP implementation and was chosen for content analyses for this report. The reason behind this model was due to the fact it explained based on organizational and technological according to a SAP stages of implementation. Organizational Factors Support from management team. Various studies have concluded that an ERP implementation to succeed it requires sustained support from the management team. Am ERP system transforms business processed and the management must plan carefully how the implementation is carried out. Thus, sustained support is required from the start to the end of the implementation. For this reason the management team should assist in the rollout of the project, determine the benefits, and define the scope of the project (Le, 1996). At the completion of the project their needs to be encouragement to help user commit to its user. Additionally, the management team helps through resolving conflicts and bring people to the same understanding and build organizational harmony across the company. A Clear Project Scope. A poorly defined project requirements and lack of proper change control procedure are one the main cause of ERP project failure. At the start of the project scope is important to avoid scope creep in the project. Moreover, senior manager must ensure that the project scope are well managed and documented in formal manner. But this is not limited to budget overruns and schedule request. An Effective Change Management and Business Process Engineering. Implementing a SAP for accounting and finance must consider the human resource and business process related to its implementation. If certain changes occurs during its implementation this will result in changes in some of the processes and potential change the roles, responsibility and the organizational structure (Le, 1996). Therefore, any initiative that bring changes or scope creep will run the risk that the change will not be accepted within the organization and therefore will prevent successful implementation of the SAP system. The Implementation Team. A SAP implementation consists of the following the Project Lead, Project Manager and SAP experts, testing team and the technical team. The project team is important in the first phase because it’s during these phase that the requirements are mapped, scope is established. However, during the implementation phase the implementation requirement cannot be re-structured. User Involvement is one of the most important aspects of a SAP implementation. User involvement is necessary during all phases in order to achieve a good customization system and user acceptance. Users participate in defining the business requirements, helps in testing and analysis of SAP configuration. According to Baronas and Louis stated involving end-user in developing information system helps in system acceptance since they have invested in its successful implementation. Testing also by users helps in quality assurance (Le, 1996). Strong Communication. One of the main reason behind an ERP implementation failure is poor communication between implementation team members. Poor communication is known to prevent departments with organization from assessing the impact of the changes brought about through the implementation of the ERP. In addition, communication is essential during the first two stages where there is need for strong communication to come up with specification, scope of the project and communicate with senior management and project team. Formalize the planning and Schedule the Project. Scheduling and planning is important for successful SAP implementation. There various stages that include the feasibility study, planning, identify the goals of the project, implementation, testing and commissioning. Planning and scheduling is necessary to be able to finish the implementation within the prescribed time frame without going through scope creep (Le, 1996). Scheduling and planning can also be used to monitor the progress of the project. A good project plan ensures that coordination and monitoring of all tasks during the entire implementation phase. Proper training program. End user training is needed to ensure that the user understand how the system operates. Majority of the companies train their employees within the company on how to sue the SAP software. They do so that they are able to manage the system themselves after implementation. Training therefore becomes an important component for a successful implementation of a SAP. Conclusion The repost has identified the critical success factors for successful implementation of a SAP system with regards accounting and finance. The report has identified factors that are required to be completed within a certain time and within a certain budget give the return of investment. It has also gone to show that the implementation of an ERP system is only the beginning. A well implemented system will become a pillar within the organization operations. It will set benchmarks for the best business practices. Therefore, for companies to achieve these success they need to choose an ERP system that has a potential to accommodate the growth need of the organization as it evolves. SAP for accounting and finances offers is scalable to meet the growth needs of the organization. However, organization must appreciate the fact that an ERP implementation is real challenging therefore the organization needs to plan and execute with a long term implementation strategy. References Aiken, P. (2002). Enterprise resource planning (ERP) considerations. VCU/Institute for Data Research, Birnbaum, R., & Edelson, P. J. 1989, How colleges work: The cybernetics of academic organization and leadership. The Journal of Continuing Higher Education, 37(3), 27-29. Chen, J. 2007, SAP ERP accelerating Taikang Life’s business standardization and internationalization. IDC Case Studies Clemons, C. 1998, Successful implementation of an enterprise system: a case study. Americas Conference on Information Systems, Baltimore. Dillard, J. F., & Yuthas, K. 2006, Enterprise resource planning systems and communicative action. Critical Perspectives on Accounting, 17(2), 202-223. Dillard, J. F., & Yuthas, K. 2006, Enterprise resource planning systems and communicative action. Critical Perspectives on Accounting, 17(2), 202-223. Helo, P., Anussornnitisarn, P., & Phusavat, K. 2008, Expectation and reality in ERP implementation: Consultant and solution provider perspective. Industrial Management & Data Systems, 108(8), 1045-1059. Huang, S., Chang, I., Li, S., & Lin, M. 2004, Assessing risk in ERP projects: Identify and prioritize the factors. Industrial Management & Data Systems, 104(8), 681-688. Kale, V. 2000, Implementing SAP R/3: the guide for business and technology managers. SAMS Publishing. Lamers, M. 2002, Do you manage a project, or what? A reply to “Do you manage work, deliverables or resources”, international journal of project Management, april 2000. International Journal of Project Management, 20(4), 325-329. Lamers, M. 2002, Do you manage a project, or what? A reply to “Do you manage work, deliverables or resources”,< i> international journal of project Management, april 2000. International Journal of Project Management, 20(4), 325-329. Le Vie, K. 1996, Things to look forward to with SAP. Unpublished manuscript. Miles, M. B., & Huberman, A. M. 1994, Qualitative data analysis: An expanded sourcebook Sage Publications, Incorporated. Read More