Critical Analysis of Systems Application Products - Case Study Example

Topic Name Lecturer Institution Date Introduction This read covers an in-depth research on Systems Application Products, with a critical analysis on the overall issues involved with the adoption of SAO in organisations. The literature review of the paper refers extensively to written academic articles with basic consideration on SAP adoption and its diffusion in the firms. It follows a definite structure of an overview, the challenges of adopting SAP and the benefits that a business organisation derives from the process. Recommendations and a brief conclusion are also inclusive. Overview of SAP In view of McDonald (2002), SAP, standing for Systems application Products, refers to a system for Enterprise Resource Planning that can be used to process data, is a system that was introduced into business operations to provide services with a varied number of currencies and languages through use of real-time applications relevant to businesses. Later, after the development of two earlier versions, an introduction of a client-server form of business application saw the development of SAP R/3 software, which later became adopted as SAP, in the early 1990’s. Taking into account the ease of operation of the system, a graphical user interface (GUI) was developed which made the usability of the software manageable, which was different from the mainframe user interface. SAP became most popular in business operations in the market for business applications in the following decade. The popularity and success gained is attributed to its high flexibility. The system was modular and versatile in design; its components could easily be possessed and implemented bit by bit. Customers could then utilize the flexible nature of the system to adopt a module that would best fit into their form of operation and fix it into the existing systems. Flexibility, however, is one of the major design drawbacks of SAP, which led to accounting related scrutiny on its performance. McDonald (2002) further argues that the development of SAP however underwent three stages, with SAP/3 being an upgrade of the previous two versions. The design for SAP that is under implementation has varied application including provision of solutions to distribution, supply of resources and raw materials and financial matters. SAP is one of the currently used enterprise resource planning system by big business organisation. However, adoption of SAP as a form of ERP (enterprise resource planning) is associated with other challenges. Oracle is also such an application that is the market and has been adopted by companies. Challenges of SAP adoption The main challenge that the adoption process faces is lack of integration between the operational and strategic levels of management of the enterprises. According to O'Leary (2000), strategic management systems have displayed poor response to risks and opportunities that present themselves to the enterprises while making informed decisions on the provision of resources and capital for investment which secure the success of the organisation. Operational planning of enterprises has set objectives that emphasize on short-term success in building the value of enterprises, instead of shifting its success goals to long term periods (McDonald, 2002). Long term goals against short term decisions can be best analysed on condition of productive cooperation of the strategic and operational management of enterprises. Another challenge facing adoption of SAP is the inadequate integration of ERP systems. There is poor coordination among the operational, control and planning systems of enterprises. Key areas of success such as proper planning, performance appraisal and financial budgeting have not been well executed. This has been coupled up with ineffective management information systems which may respond only to few problems in the organisation. Muir (2010) is of the view that introduction of online Analytical Processing systems brings relief in the centralisation and management of data. But without proper integration of all components of ERP systems, adoption of SAP might be difficult as integrated solutions are vital in the adoption process. Adoption of SAP has been hindered by dynamic and complex nature of business structures. Most organizations have varying levels of operational and strategic management. These organisations make it difficult for the adoption of SAP into the organisation as a result of decentralization in the competence of decision making of the firm. O'Leary (2000) proposes that decentralization of the business, product and corporate level leads to complex business structures characteristic of detached productivity, functionality and processing levels within an organisation, commonly coupled up with decision making teams shifting their interests to performance appraisal and planning. The complexity of the firm has as well been linked to takeovers and the dynamism due to investment by other firms. The last challenge in the adoption of SAP is the development in technology and legal procedures. As much as technological advancement increases productivity of companies, it exerts a lot of pressure on the organisation as the management has to ensure that they keep up with the advancements as well as maintaining the existing technology (O'Leary, 2000). The legal procedures also see to it that organization adhere to the law in their overall practice. The internet also exposes an organisation to high competition. Thus, the firm might prefer responding to technological and legal matters to SAP adoption. Benefits of using SAP  The SAP R/3 software is made up of numerous desirable features which have defined its flexibility of adoption and operation. For instance, the three tier architectural design composed of application, presentation and database servers makes it easy for companies to adopt and use the system in their operations. According to Sedgley et al. (2001), SAP employs the WBS tool in executing tasks. Major tasks are thus broken down and organized in a hierarchy, enabling the disintegration of WBS elements into separate connection of the business actions. With SAP, planning can be done at the operational or strategic planning levels, while details of budgetary allocations in form of estimation are analysed and kept. The information processing capability of SAP is high. The latest version of SAP has the ability to work with over 10 international languages, inclusive of such basic international languages such as English and German. SAP incorporates defining features of varying world currencies. Therefore, the system is highly capable of analysing and providing reliable data to international companies. Due to poor integration of the functional levels of most large business organizations, SAP modules are developed in such a way that functional areas in companies; production, supply of resources, human resource and marketing are organized (Muir, 2010). This organisation of functions of the firm ensures real-time and high integration of information that would have been processed by the given functional department.  SAP is beneficial to enterprises as it ensures that data processed in the accounts department of the organization is reliable, precise and accomplished since SAP systems incorporates all information relating to transactions done in different functional areas of the company. Integration of transactions from given departments is achieved by way of provision of comprehensive record of the data related to finances. The SAP accounting tools are part of the design of the module. According to McDonald (2002) & Sedgley et al. (2001), the recent versions of SAP are less costly and disruptive with regard to management and adoption of software release. This is as a result of the improvement made to the whole package. Organisations are therefore in a position to utilize the functionality of emergent software and not compromising the reliability and stability of the application. Resolutions For an organisation to successfully adopt SAP, it must ensure that its information is integrated. Of great significance is the harmonization of the structures of the organization, the estimated and actual values of operational costs and specification of data fields. In addition, integration of both non financial and financial data is vital to the success. Coordination of business processes which enhances the adoption of SAP can be achieved by means of ensuring decentralization of collection of information within the firm, cooperation among the different departments and strong ties being built between the operational and strategic management bodies. O'Leary (2000) view that control functions must be guided and systems of managing workflow implemented. Organisations should be in a position to access the entire global market through the internet. Multi-national organisations need consistent connectivity and updates on the global events, in addition to data flow that is continuous. Integration of the internet and the business strategies is an affordable technique of ensuring successful SAP adoption. Any organisation that needs to adopt SAP successfully must take into account the usability of the system. The user graphical interface of SAP to be adopted is a vital factor of consideration. In Muir’s (2010) view, the management and the end users of SAP must be at ease with the operation of the SAP. Adoption of SAP with a friendly user interface is likely to be successful. Models of interpreting and visualizing enhance the adoption of SAP. Transparency is boosted by interdependencies between value drivers and their subsequent impacts. An organisation therefore must ensure that methods of interpretation and visualization employed work toward achievement of transparency. Conclusion In conclusion, the process of adopting SAP into business organisations is a tedious process, as the management of the firm has to consider a number of factors, such the cost of adopting the system, the relevance of the systems and the possible advantages that are derived from the process. The challenges associated with the adoption of ASP, including the complex structure of the business organisation have been highlighted, and solutions to the challenges provided. Adoption of SAP is a critical step for the success of business in the current state of technological advancement. Works Cited McDonald, Kevin. Mastering the Sap Business Information Warehouse. New York: John Wiley & Sons, 2002. Print. Muir, Nancy, and Ian Kimbell. Discover Sap. Bonn Boston: Galileo Press, 2010. Print. O'Leary, Daniel E. Enterprise Resource Planning Systems: Systems, Life Cycle, Electronic Commerce, and Risk. Cambridge, UK: Cambridge University Press, 2000. Print. Sedgley, Dawn J, and Christopher F. Jackiw. The 123s of Abc in Sap: Using Sap R/3 to Support Activity-Based Costing. New York: Wiley, 2001. Internet resource. Read More