Evaluating the Implementation of an Enterprise System - Rolls Royce - Case Study Example

Evaluating the Implementation of an Enterprise System Student’s Name Institutional Affiliation Executive Summary Information technology and information systems have a remarkable influence on the productivity of both service and manufacturing organization. An enterprise system has the ability to ease business processes and practices by integrating them into one accessible and continuous system. Information systems are vital in supporting critical decision-making where information and data is required from numerous department including customers, suppliers, partners, and department. The following paper focuses on evaluating the implementation of an enterprise system. It will consider the evaluation of Enterprise Resource Planning (ERP) implementation at Rolls Royce by analyzing the triggers of implementing an enterprise system. Moreover, the report will consider the enterprise and vendor features, issues encountered in the implementation, and how each of the issues was solved. It will also evaluate implementation in terms of project management and information system models or strategies. Lastly, the report will offer recommendations for sustaining the current ERP system. Table of Contents Evaluating the Implementation of an Enterprise System 1 Executive Summary 2 Table of Contents 3 Evaluating the Implementation of an Enterprise System 4 Introduction 4 Main Terms 7 Enterprise System and Vendor 7 Issues Encountered During Implementation 9 Cultural Issues 9 Business Issues 10 Technical Issues 11 Issues Encountered in the Current Situation 12 The Enterprise Trend and Perspectives 14 Recommendations 15 Conclusion 17 References 17 List of Acronyms 18 Evaluating the Implementation of an Enterprise System Introduction Information technology and information systems have a remarkable influence on the productivity of both service and manufacturing organizations (Powers & Dickson, 1973). The last decade has witnessed increased implementation of enterprise systems such as enterprise resource planning ERP, EDI, and MRP with the goals of enhancing productivity. Nonetheless, ERP has received increased attention with its ability to integrate all departments through a single system that allows increased information sharing. Even so, not all enterprise systems implemented become successful. Therefore, there is need to understand the implementation process through a critical angle to understand how well to implement an enterprise system. To evaluate the implementation of an enterprise system, the paper will consider the implementation process of an ERP at Rolls Royce. Rolls Royce is an American automobile manufacturing company. The company came back into the private sector in 1987 with the acquisition of Northern Engineering Industries. Its acquisition allowed the company to consolidate its competencies in industrial power Yusuf, Gunasekaran & Abthorpe, (2004). In 1995, the company acquired Allison Engine Company expanding its business into the area of industrial gas turbines and aero propulsion industries. The acquisition was a success allowing Rolls Royse to penetrate the U.S markets effectively. It develops some of the world’s best and economical engines including the Trent Series engines Yusuf, Gunasekaran & Abthorpe, (2004). Moreover, its industrial power generation sector offers both nuclear and electrical power for power plants, naval sector, and marine applications. In the automobile business, Rolls Royce offers executive and elegant designs with the Rolls Royce trademark. Rolls Royce is also a global business with presence in about 14 countries offering sales, spare part centers, manufacturing plants, and mechanical overhauls. Due to its increased growth in the late 1990s, Rolls Royce management decided to adopt a new organizational structure that identified the strategy and requirements for change to reveal customer needs Yusuf, Gunasekaran & Abthorpe, (2004). One of the main triggers for management to implement an ERP was that Rolls Royce used 1500 systems separately for its operations (Yusuf, Gunasekaran & Abthorpe, 2004). These projects featured mostly internally developed systems. Nonetheless, the legacy systems were costly to operate and challenge to maintain as well as develop, Moreover, the systems did not offer accurate, timely, accessible, and consistent data that was needed for timely and effective decision-making as well as performance evaluations. According to Yusuf, Gunasekaran & Abthorpe, (2004), Rolls Royce’s outdating systems did not offer themselves entirely to a contemporary manufacturing environment. Again, Yusuf, Gunasekaran & Abthorpe, (2004) indicated that some of the legacy systems were too outdated that they had compliance challenges of the year 2000. Rolls Royce work was functionally sloping as numerous departments operated in isolation. Its last and major information manufacturing system was named MERLIN (merchandise evaluation of resources, logistics, and inventory). Merlin was more of a scheduling system founded on MRPII system values, which made it prone to physical manipulation as well as the lack of communication between isolated sites. MERLIN was also unable to communicate to Rolls Royce’s inventory-based instructing system (IBIS) (Yusuf, Gunasekaran & Abthorpe, 2004). Work or operations in progress was transmitted between sites, but could not be traced accurately, regularly causing stock and inventory recording problems. Rolls Royce also used the corporate cost accounting system (CCA), which monitored financial and accounting transactions. The need to implement an ERP was based on these isolated and incompatible information systems. Moreover, other departments also used separate systems such as commercial, procurement, and financial functions. Its whole legacy system did not permit Rolls Royce to launch direct, virtual communication with suppliers, customers, and partners. Overall, the legacy system did not support relevant business growth strategies needed to improve the company. Main Terms Enterprise System: An ES is an extensive application package or software that supports numerous organizational processes, information sharing, reporting, and analysis in large firms. Enterprise Resource Planning: An ERP is a type of ES software that allows effective use of information from all departments within an organization. Enterprise System and Vendor Rolls Royce IT infrastructure and enterprise system were developed through a partnership with Electronic Data Services (EDS) in 1996 (Yusuf, Gunasekaran & Abthorpe, 2004). The company outsourced its IT department to EDS, meaning that EDS was fully in control for the development and maintenance of Rolls Royce’s IT systems including overusing the current IT infrastructure and offering sufficient IT resources. Outsourcing was a decision reached to all the company focus on its core business, which is developing and manufacturing automobiles and aero engines. EDS was selected based on their sufficient experience in the aerospace manufacturing industry having worked with similar clients such as Rolls Royce. EDS was also used as the main ERP implementation vendor (Yusuf, Gunasekaran & Abthorpe, 2004). EDS was also charged with selecting key officials and ERP specialists to develop and run the project. Rolls Royce made numerous changes in 1998 aimed at flattening the structural hierarchy. This required the use of customer-focused business units (CFBU) for the purpose of making sales deals in numerous market segments (Yusuf, Gunasekaran & Abthorpe, 2004). The second enterprise was the operational business units (OBU) developed for manufacturing support for creating the product, the whole business, and executive team control groups. The ERP for Rolls Royce contains a team of management specialists from the EDS outsourcing firm. Moreover, EDS is also equipped with SAP specialists (Yusuf, Gunasekaran & Abthorpe, 2004). Inside the specialist management team are internal managers and personnel with vital knowledge and experience in cross-functional business interactions of the legacy team. The ERP implementation team was based on the collaboration of the OBU team and the ERP planning teams that were in charge of implementation, changes, and training. The hardware needed for the implementation was about 1000 new personal computers, 6000 software licenses, and three servers in excess of 2 terabytes (Sun Microsystems, UNIX, and NT servers) (Yusuf, Gunasekaran & Abthorpe, 2004). For the software, SAP applications were applied in terms of ensuring a bridge between legacy systems and the new ERP. The implementation of ERP or an enterprise system has numerous challenges for any organizations. All enterprise system implementations have numerous challenges, but for Rolls Royce, the problems can be categorized into cultural, business, and technical issues. Issues Encountered During Implementation Cultural Issues For an ERP implementation to be successful, one of the main elements is its acceptability within the organizational or corporate culture (Lapiedra, Alegre & Chiva, 2011). This is often difficult for diversified organizations that operate in numerous segments and regions around the world. In the case of Rolls Royce, the project team of ERP implementation team anticipated a high level of acceptance of the ERP in parts that offer the same or improved functionality than the legacy system (Yusuf, Gunasekaran & Abthorpe, 2004). Nevertheless, some processes and functions might not receive complete appreciation or acceptance that the old system once had. The ERP implementation project team decided to address this challenge by demonstrating the enhancements developed to the organization as a whole, therefore eliminating the outdated isolation of OBUs and segments (Yusuf, Gunasekaran & Abthorpe, 2004). The unusual implementation plan was expanded in an attempt to cater for cultural and training changes. Employees and managers were trained through organized seminars that were divided into two different groups of mass users and specialists. The expert training was conducted by SAP through technical basis (Yusuf, Gunasekaran & Abthorpe, 2004). Moreover, the training in seminars was aided through the use of demonstrations in the workplace, as well as information presentations and meetings to communicate information to all personnel regarding changes in working practices. The system was expected to train about ten thousand employees and experts. Business Issues The second main challenge in developing and implementing an ERP project is ensuring its alignment with business strategies and structures (Shaul & Tauber, 2013). The SAP rule 3 necessitates a justly firm business structure for the ERP to operate effectively (Yusuf, Gunasekaran & Abthorpe, 2004). At Rolls Royce, contributors of cross-functional seminars realized that their operational practices must be modified to meed SAP requirements, which means eventually changing the manner Rolls Royce does its business. The ERP team addressed the changes by applying an internal business process re-engineering (BPR) program (Yusuf, Gunasekaran & Abthorpe, 2004). The BPR comprised of four phases, the first addressing drawing and mapping of existing processes. In the second phase, problems and issues were identified from the already mapped processes. The third step focused on using some of the identified problems to an illustration of SAP, to recognize possible processes aligned with SAP (Yusuf, Gunasekaran & Abthorpe, 2004). The adjustments to the organizations business process intended the SAP rule three software not to be change or modified. This is because such modifications would have been significantly costly in terms of newer software implementation and implementation resources. The software used without any modifications was termed “Vanilla SAP” (Yusuf, Gunasekaran & Abthorpe, 2004). Technical Issues Another major challenge in enterprise implementation is the technicalities. Rolls Royce encountered technical issues in terms of data accuracy (Yusuf, Gunasekaran & Abthorpe, 2004). The new ERP needs the recovery of out-dated data from the old system that requires normalization, screening, and storing in a sensible and accurate format in the new system data storage. One of the main challenges in this area was data replication. In numerous departments, the legacy system was kept in operation until a time that data could be retrieved to the new system. To achieve these goals, EDS applied interfaces between each system. Rolls Royce’s CAD system remained intact as the process to change the file formats would be too costly and need the application of valuable resources that were required for the ERP core implementation (Yusuf, Gunasekaran & Abthorpe, 2004). The organization decided to embrace and use the SAP solution provided for the defense and aerospace industry. These solutions are the market leaders in the industry with a highly configuration effectiveness for increased flexibility software implementation. The release strategy for the ERP was carried out through prearranged implementation factors developed by the organization’s Rolls Royce Steering Committee and Implementation Team (Yusuf, Gunasekaran & Abthorpe, 2004). All other third party software required and currently requires SAP accreditation to ensure that upgrade processes necessitate a business case. In addition, business information produced by SAP requires to be comprehensively justified in a business scenario that is based on a customary format for internal utilization. Again, data entering the new ERP requires recognizing, authenticating, cleaning, loading, archiving, and maintaining inside the data warehouse. The last issue focuses on the IT project / portfolio management system, which requires an organization to have a portfolio management office. The need to have such an office is to offer the tools, methods, quality, and standards by which all the projects in the implementation will be executed (Shaul & Tauber, 2013). Nonetheless, Rolls Royce did not and still has not established a PPMO for planning and reporting functions or practices of the ERP system. PPMO is a crucial implementation component to offer the structure and help needed for assessing, justifying, planning, defining, monitoring, and implementing projects. Moreover, a PPMO would easily address conflict challenges through limited resources and other restrictions. For Rolls Royce, the project was executed by two different team one from the EDS and the organizations OBU team (Yusuf, Gunasekaran & Abthorpe, 2004). The team of specialists developed and implemented plan that included numerous features of the PPMO. A recommendation would be adopting a PPMO to ensure that all projects are implemented in a systematic manner that allows for wider evaluation and control. Issues Encountered in the Current Situation After the implementation of an ERP, an evaluation is necessary tom determine any areas that require improvement or modifications (Shaul & Tauber, 2013). Moreover, the need to assess the risks is also important in catching up with future demands and technological advancements. There is a need to review the current situation to ensure that the organization achieves its objects and requirements. In the case of Rolls Royce, the current ERP system still encounters numerous challenges. Due to lack of a PPMO, Rolls Royce’s ERP implementation team continues to encounter challenges in aligning the business process to software configuration (Yusuf, Gunasekaran & Abthorpe, 2004). This challenge is mainly experienced due to lack of a clear understanding of operations by the outsourced firm with the internal experts on ERP. Moreover, the organization continues to experience issues in training employees and managers to accept change, while convincing them to conduct business in a whole new manner (Yusuf, Gunasekaran & Abthorpe, 2004). The change and training issues is based on the lack of leadership, which is needed to create a compelling message and vision for the company in terms of transforming how the company interacts within its various departments (Shaul & Tauber, 2013). With the advancement of technology, most older or early adopters of technology have difficulties in learning new technologies. Rolls Royce has experienced issues in teaching staff how to use modern IT equipments such as updated versions of PCs and software (Yusuf, Gunasekaran & Abthorpe, 2004). Furthermore, the current situation is also affected by logistical challenges in terms of resource delivery delays during technical equipment connections or configurations. Another major challenge facing the current ERP system is the time consumed during data clean ups. Experts did not anticipate the old legacy system and the huge amount of time needed to make old data ready for the new system (Yusuf, Gunasekaran & Abthorpe, 2004). With the outsourcing of the ERP implementation, it was also hard to train the behavior of SAP consumers such as capacity owners and MRP controllers. Another major challenge that the company continues to face is the continuation of support after implementation. Rolls Royce still requires increased collaborations between its experts and EDS experts to address challenges evaluate the project effectiveness, and address upgrades as well as training. Lack of continuous support or offering insufficient and continuous support would lead to a system failure. Based on these challenges, it is imperative for the company to develop a lasting and integrated relationship with EDS. Moreover, Rolls Royce leadership has a critical role to play in addressing resistance to change. This is based on the need to use numerous internal strategies that can motivate and keep a consistent communication platform for engaging employees. Overall, the current ERP at Rolls Royce has achieved numerous objectives including migrating from the legacy system to the new system. However, it current operations are still under threat from the lack of cooperation or planning in terms of continuous improvement. Moreover, with ever changing technologies, the need to keep up to date still remains a risk. The Enterprise Trend and Perspectives Developing and implementing an enterprise system requires increased expertise and experience. As illustrated in the previous sections, challenges are wide and incorporate business, culture, and technical issues. Nonetheless, the need to understand and adopt an enterprise perspective and trend is important in achieving successful systems. Rolls Royce began by responding to market needs that require smother market operation and business processes in all its operations and processes. The company has understood the cultural, business, and technical challenges of this large project, thus developing a solid core implementation and maintenance team. Rolls Royce’s ERP has developed through different faces thanks to the availability of experts and experience in its business processes. The trend of ERP has led to the successful bridging of the legacy systems while cleaning up data, which has enhanced the organization’s information management (Yusuf, Gunasekaran & Abthorpe, 2004). Knowledge on project management and information systems has also been expanded within the organization through the training of senior management officers, especially in the executive group who were previously lacking technical orientation. Moreover, the organization has witnessed effective relationships that have been enhanced to lead both teams in normal and technical business environments. Overall, the ERP trends and perspectives at Rolls Royce have been supported by a well-established relationship and cooperation between implementation teams as well as the availability of talent in project management as well as technical information system experts and specialists. Recommendations One of the main features of a new enterprise system implementation is planning for its sustainability especially during post-implementation (Shaul & Tauber, 2013). Rolls Royce and its partners must develop a clear picture of the strategic needs for supporting the new system in terms of effectiveness (Yusuf, Gunasekaran & Abthorpe, 2004). The need to identify strategic requirements will allow for increased system stability in the future. Both teams must research and understand the various requirements of sustainability from knowledge to technicalities. The next recommendation touches on the area of leadership that is fundamental in ensuring a message of change in business practices and processes is communicated continuously and effectively (Shaul & Tauber, 2013). Rolls Royce management should develop a new vision for the company to ensure employees are aware and can adapt to the changing processes and environment without much resistance. Change is an ongoing process that requires increased motivation and the right vision to achieve objectives (Shaul & Tauber, 2013). Additionally, decision makers must be willing to alter business objective and corporate strategies with the pace of the changing information system. This can be achieved by ensuring accurate and timely delivery of reports throughout the system, which will allow change to occur more easily and quickly (Shaul & Tauber, 2013). Additionally, Rolls Royce requires developing a PPMO that address the issues of project management in terms of implementing the ERP. A project portfolio management office will align all ERP implementation activities with business process allowing all areas of concern to be addressed systematically (Seddon, Calvert & Yang, 2010). Overall, Rolls Royce requires increased enhancement in terms of project management to ensure successful and effective ERP support and sustainability. Conclusion Enterprise system implementation calls for rigorous analysis based on its huge scope of models, processes, and procedures. Increased knowledge and experience is needed to use the best project management and information systems strategies as well as models. Through the collaborative use of both strategies, organizations such as Rolls Royce can effectively align their business models by using integrated business processes through systems such as the ERP. The current ERP system at Rolls Royce has already become stable for numerous years allowing for increased benefits. These benefits are all harnessed by the current ability of the organization to develop and establish a direct and continuous communication between its department, customers, suppliers, and partners. The report has offered new insights of evaluating enterprise system implementation allowing for improved knowledge that can be applied in different scenarios. References Lapiedra, R., Alegre, J., & Chiva, R. (2011). The importance of management innovation and consultant services on ERP implementation success. Service Industries Journal, 31(12), 1907-1919. Powers, R. F., & Dickson, G. W. (1973). MisProject Management: Myths, Opinions, and Reality. California Management Review, 15(3), 147-156. Seddon, P. B., Calvert, C., & Yang, S. (2010). A Multi-Project Model of Key Factors Affecting Organizational Benefits from Enterprise Systems. MIS Quarterly, 34(2), 305-A11. Shaul, L., & Tauber, D. (2013). Critical Success Factors in Enterprise Resource Planning Systems: Review of the Last Decade. ACM Computing Surveys, 45(4), 55-55. Yusuf, Y., Gunasekaran, A. A., & Abthorpe, M. S. (2004). Enterprise information systems project implementation: A case study of ERP in Rolls-Royce. International Journal of Production Economics, 87(3), 251. List of Acronyms Enterprise Resource Planning: ERP. Merchandise evaluation of resources, logistics, and inventory: MERLIN. Inventory-based instructing system: IBIS. Corporate cost accounting system: CCA. Electronic Data Services: EDS. Customer-focused business units: CFBU Operational business units: OBU. Project/portfolio management system: PPMO. Software Application Products: SAP. Mind Map Read More