Table of contents

Letter of transmittal ………………………………………………………………………………….2

Executive summary ………………………………………………………………………………….4

Introduction ………………………………………………………………………………………….4

Limitations……………………………………………………………………………………………5

SAP migration and integration ……………………………………………………………………….6

Information bottleneck and SAP……………………………………………………………………..7

Cost variances description ……………………………………………………………………………8

Identification of costs ………………………………………………………………………………..8

Standard and actual cost ……………………………………………………………………………..9

Paper based systems…………………………………………………………………………………..9

Conclusion……………………………………………………………………………………………11

Executive Summary

The management of ABC organization is seeking to implement a SAP solution as part of their restructuring of the management of the organization’s business process. The organization’s management feels that it has to secure the services of a firm that is capable enough to help with the implementation because of the numerous challenges associated with mapping the current business processes of the organization to the SAP systems. Moreover, the organization is being faced with a number of challenges that it has to address before going on with the implementation of the system.

The current system the organization uses is based on services that are centralized where all of the organization’s processing is done on an IT infrastructure that is central. Most of the systems that the company uses do not conform to the usual standard SAP systems used outside organization because most of the systems the organization uses were built and designed in house. Some of the challenges are; how the SAP solution can access services and information that have not been implemented within its framework; how the implementation can be used to deal with the bottlenecks for processing information; and the costs associated with the production processes.

Introduction

In the current challenging business conditions, the most successful and best- run companies stay focused on the their assets that are most valuable, and that is their clients. Most of the companies, now, more than ever, are seeking to retain their best clients and in maximizing the effectiveness of each and every interaction with the customers- whether it is in sales, marketing or even service. One way to manage this is through the use and implementation of a SAP application or solution which is enterprise resource planning software that is integrated and targets requirements of a business software of large and medium sized organizations (Burleson 1999).

The solution usually is composed of a number of modules like field service, utilities for sales and marketing, product development and design, inventory and production control, accounting and finance and human resources. The application collects and then sorts and combines data and information derived from different sets of modules to give an organization different resource planning enterprises. The application also imposes on a company numerous benefits. For example it allows for easier international integration through automatically bridging barriers of language currency exchange rates and culture. It also only needs to be updated once for it to be used by the entire organization (Krumbholz and Maiden 2001).

The application also decreases the chances of redundancy errors occurring and it also provides an organization with real- time data and information. SAP creates for an organization, a work environment that is more efficient for workers, and it also imposes on vendors, past expertise and knowledge on how best create and implement the system. Additionally, the application helps an organization decrease its costs and increase its abilities of decision making, in addition to helping it attain capabilities that are differentiated in order for it to effectively compete over a long period of time. The application has been indicated to have been useful in helping numerous companies and organizations to attain excellence in all facets of relating with customers (Balasingham 2009).

Limitations

Although the implementation of a SAP application can have numerous benefits for an organization, there are also many limitations or disadvantages associated with the solution. For example, the implementation process and training costs associated with the application is expensive (Vance 2003). Also, many organizations face challenges when implementing the application some of which include failure to specify the operation goals and objectives of the application, absence of a commitment that is strong enough or a change approach that is positive, failure to deal with the differences in an organization, failure to plan the changes to the applications appropriately, and insufficient testing. All these challenges can mean the difference between having an unsuccessful implementation of the software or a successful one. However, if an organization manages to have its application implemented properly, it can go from its old slow and inefficient system to a software package that is fully integrated (Malhorta and Temponi 2010).

SAP Migration and Integration

During the implementation of the SAP software, one can perform a migration of two kinds of data; activities and business partners. The migration of data is usually based on the conversion of data stored in XML format to structures of ABAP Dictionary. Therefore, the user list data, which is usually e- mail relevant, and the data relevant to business partners is transferred to the ABAP tables CRMD_MBA_MSGSTOR from the Java table MBMANDTSTORE. There are three main activities involved in transferring data and these include the migration, the downloading of the objects for customizing and the monitoring of the migration. In executing the data migration, one should access transaction option, migrate, in the SAP system and specify which migration parameters are going to be used (Leimbach 2008).

If one wants to migrate or transfer activities, they should select the checkbox called userlist; otherwise it would not be possible to synchronize the activities using the server. One can either transfer all of the activities or only the activities found within a defined time or period. If the organization plans to utilize workforce management for resource planning and for synchronizing tasks and dates with groupware, they can also perform migration. To achieve this, one should select the checkbox labeled workforce management. If one prefers the contents of the MBMANDSTORE table to be erased after the migration has been performed, they should select the checkbox labeled Delete Java store. After the migration has been executed, the ISPCFG table (which can be seen in the SM30 transaction) is filled automatically with the needed entries for the ABAP MapBox. One should check that the X value was assigned automatically to the CRM_MAPBOX parameter to activate the ABAP MapBox (Yusuf, Gunasekaran and Abthorpe 2004).

After the data migration has been executed, one must do an initial load for every one of the customizing objects. To be able to perform this task, one must access R3AS transaction and enter the option GWA*as the object for loading. Further, the CRM option should be entered as the site of source and the destination site that is relevant with Groupware Adapter as the site type. One can monitor the migration of data and display the log of application after the migration has been executed. To accomplish this, the Display Logs option should be chosen from the toolbar. CMW_MBX_MIGR is the analysis object for data migration. If one wants to only display the application log part, they must limit their search, by specifying, for example, a subject like ACTIVITY, USERLIST or BUPA (Yusuf, Gunasekaran and Abthorpe 2004).

Information Bottleneck and SAP

It has been indicated that SAP Interactive Forms can be used to significantly decrease the chance of bottlenecks occurring in the process of receiving goods. This is because these new forms can be automatically distributed in times when an activity is due or expected, increasing or making it possible for one to obtain greater efficiency. In addition, there are also interfaces that are more engaging that are available for those organizations that do not utilize the SAP software. When combined with other applications such as the Arch FLM, the SAP software can be used by an organization to provide it with an infrastructure that is robust for reporting, as well as, tracking the forms of the application that the organization has in circulation. This in turn, offers the organization a greater or increased transparency into process bottlenecks. The date of delivery is accurate, as well as, self- policing. An organization, therefore, can have a better view of their customers, what they are ordering, what their purchases are, and when the customers should expect their goods to be delivered. As it follows, vendors also receive their correct and punctual payments (Francalanci 2001).

The successful implementation and management of the SAP application is performed for the minimal information bottleneck therefore, SAP performance management is a proactive approach used for monitoring and managing the performance of the collective and individual subsystems that make- up the SAP solution, OS hardware, application and database together with the 3^rd party bolt- on systems that, together, solve the challenges a business is experiencing. As it follows, a performance management system for the SAP solution assists an organization in pointing out the performance bottlenecks that are pending, helping to justify to what extent and when an investment is needed to keep at bay problems that derail performance of the solution (Yusuf, Gunasekaran and Abthorpe 2004).

Cost Variances Description

Cost or price variance is the difference between the actual cost of production and the associated estimated or budgeted cost. It is a metric used for indicating the performance of costs that can be drawn from earned value data. It can be derived by subtracting earned value from actual cost. When one gets a value that is positive, it is an indication that favorable conditions are available; on the other hand, a negative value indicates the presence of conditions that are unfavorable. Positive cost variances indicate that projects have been completed under budget, while negative values indicate potential overruns in the contract (Maskell and Baggaley 2003).

Identification of Costs

Costs in business may include revenue and capital costs, indirect and direct costs in addition to variable and fixed costs. The identification of these costs, therefore, is a critical aspect of numerous businesses and is needed for business owners to understand and set pricing and product structures.  Costs associated with businesses can be divided into three main categories. These include revenue and capital costs, indirect and direct costs and variable and fixed costs. Capital costs are those costs associated with expenses resulting from the purchase of either capital or permanent capital resources. Revenue costs on the other hand, are those costs that are necessary for the daily running of a business or organization. Those daily costs related to running organizations usually come under the indirect and direct costs category in most financial management processes. The direct costs are those involved with the production of goods and services directly while the indirect costs are those associated with the support of the product service. Fixed costs are those costs that remain constant while variable costs are those costs which vary constantly according to production levels (Kaplan and Bruns 1987).

Standard and Actual Costs

Accurate costing gives the management of an organization the opportunity to understand the costs of products, provide decision making that is based on facts regarding the profitability of a product and the ability to ultimately decrease expenses of a business, thus increasing its profitability. Standard costing is the kind of costing that depends on the business setting a cost for a product that does not alter or remains constant until the business changes it by setting another standard. Actual costing on the other hand means that the system will utilize the actual costs of transaction for inventory valuing. Actual costing is much less forgiving that standard costing for mistakes related to timing on the part of the users (Maher and Rahan 2005).

Paper Based Systems

Paper based quality management applications are commonly used in medium sized companies. While it is possible for this system to be successful in managing the quality of products and processes, they have been indicated to increase the risk of non- compliance of cGMP significantly in organizations that are regulated by FDA. The system also limits the ability of a manufacturer to implement continuous initiatives for improvement. Such systems have also been indicated to act as bottleneck for those organizations experiencing rapid growth. However, these challenges in a company can be eliminated with the use of the newer and faster applications such as the SAP software which reduces or eliminates all- together, such challenges as bottleneck (Ehrlenspiel, Kiewert and Lindemann 2007).

Conclusion/ recommendations

As it has been seen, the SAP application can be extremely beneficial for a company in a number of ways. For example it allows for easier international integration through automatically bridging barriers of language currency exchange rates and culture. It also only needs to be updated once for it to be used by the entire organization. The application also decreases the chances of redundancy errors occurring and it also provides an organization with real- time data and information. As it follows, it would be advisable for an organization to utilize the SAP application rather than utilizing the traditional paper based system.

References

Balasingham, J 2009, ‘Management challenges for emerging networks and services’, in:     International Conference on Ultra Modern Telecommunications & Workshops, ICUMT          2009.

Burleson, D 1999, Oracle SAP Administration, O’Reilly, New York.

Ehrlenspiel, K, Kiewert, A and Lindemann, U 2007, ‘Early Identification of Costs during            Product Development- Development- Concurrent Cost Calculations’, in Cost- Efficient        Design, Springer, New York.

Francalanci, C 2001, ‘predicting the implementation effort of ERP projects: empirical evidence    on SAP/R3’, Journal of information technology, vol. 16, no. 1, pp. 33–48.

Kaplan, R and Bruns, W 1987, Accounting and Management: A Field Study Perspective,   Harvard Business School Press, New York.

Krumbholz, M and Maiden, N 2001, ‘The implementation of enterprise resource planning            packages in different organizational and national cultures’, Information systems, vol. 26,           no. 3, pp.185–204.

Leimbach, Y 2008, ‘the SAP Story: Evolution of SAP within the German Software Industry’,     IEEE Annals of the History of Computing, vol. 30, no. 4.

Maher, L and Rahan, G 2005, Fundamentals of Cost Accounting, McGraw-Hill, New York.

Maskell, N and Baggaley, B 2003, Practical Lean Accounting, Productivity Press, New York.

Malhorta, A and Temponi, C 2010, ‘Critical decisions for ERP integration: Small business            issues’, International Journal of Information Management, vol. 30, no.1.

Vance, A 2003, SAP costs too much – customers ROI challenged, The Register, UK.

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