Benefits and Challenges of Systems Applications and Products - Case Study Example

ADOPTION OF SAP SYSTEMS IN BUSINESS ORGANIZATIONS Name Course Tutor Date Introduction The process of globalization is very diverse and can be measured in different ways. Technological advancement is one of such measurement mechanisms that have seen organizations make major milestones (Quattrone &Hopper, 2006). Organizations are adopting integrated systems such as SAP (Systems, Applications and Products), that are meant to integrate the daily operational mechanisms of the business and the external environment in order to involve modern principles and knowledge into contemporary business (Quattrone &Hopper, 2006). The aim of this report is to evaluate the SAP systems based on its benefits and challenges as well as giving an overview of SAP and then make necessary recommendations to its application. Overview of SAP Systems SAP as aforementioned is an acronym of Systems, Applications and Products used in data processing. It refers to software that is widely applied in the field of enterprise resource planning. The software was an idea of three engineers in Manheim, Germany. The three worked in SAP SE Company (Hawking, 2010). SAP is multi-operational software that has had a lot of appreciation in the business world, especially in Enterprise Resource Planning (ERP). There are three entities of SAP ERP; quality assurance, production, and development environments. The production entity deals with daily business operations while the quality assurance mainly incorporates all the final testing and fine tuning of the products prior to transportation to the production plants (Yusuf et al, 2004). On the other hand, the development entity mainly handles all implementation tasks. Statistically, there are around 270,000 installations of the software worldwide (Hawking, 2010). SAP is considered the arsenal of most business oriented IT infrastructure (Quattrone &Hopper, 2006). There are many functions that are performed by the software from accounting functions such as balance sheets and other financial reports presentation, human resource management, customer relationship management, enterprise performance management, supplier relationship management, logistics and supply management, inventory, and production all these housed in different modules (Hawking, 2010; Quattrone &Hopper, 2006; Yusuf et al, 2004). SAP has various modules that are all interlinked to reflect its function ability. The software or system enables all accounting and business operations of different departments to be managed from a centralized application (Hawking, 2010). With the advent of cloud computing, there are vendors who offer Cloud based ERP solutions SAP is not left behind on that it is also provided in some organizations as a Cloud based service (Quattrone &Hopper, 2006). Based on the statistics of the customers and countries where these applications are used, there are many ERP systems. However, the top rated based on the aforementioned attributes are Epicor, Infor, Microsoft Dynamics, Oracle and SAP (Berdie & Osaci, 2012; Quattrone &Hopper, 2006). Challenges and Benefits of SAP Like any other good system with benefits in the market, there are challenges facing the implementation of SAP into business operations. There are many benefits that accrue from the use of SAP ERP. Before exploring the benefits, it is essential to understand that the current commercial versions of SAP; Business Suit/R/3 and Business One, are completely integrated and serve as real-time business softwares (Berdie & Osaci, 2012). The major benefit of SAP is that all transactions are processed end to end eliminating the chances for inconsistencies between the affiliated systems (Quattrone &Hopper, 2006). As a matter of fact, most businesses have integrated their ERP functions with SAP (Berdie & Osaci, 2012). SAP integrates all the cross functioning business operations (Yusuf et al, 2004). This reduces the risk of data loss as well as data redundancy that is a menace with the traditional systems. This is done through real time production of any data at the press and release of a button (Quattrone &Hopper, 2006). The software has capability of integrating with the World Wide Web, thus the maximization of a range of business operations (Hart & Snaddon, 2014). With this the business is able to conform to all the accounting standards and exploit e-commerce to its own advantage (Hart & Snaddon, 2014). The end result of this is expansion of the business.SAP has the ability to be configured and customized (Yusuf et al, 2004). This capability makes it possible to tailor the system or fine tune it to meet the business requirements (Quattrone &Hopper, 2006). The ability to link all the different modules aforementioned into a centralized application ensures security of all the data and is also cost effective compared to stand alone systems. The work that was previously done by individuals such as management accountants can now be undertaken by SAP R/3 application. This is mainly because; it automatically collects data and evaluates the mistakes. For example, if the company receives problematic invoices, the systems signal the user (Hart & Snaddon, 2014). SAP ERP also breaks the barrier between management and accounting because, the manager can access all the financial data that are used to generate a report. Hart & Snaddon (2014) also note that there is also the possibility of forecasting through using the data mining software. The forecast results can be disseminated from the central point to all departments for verification and further report writing (Sternad et al, 2014). This increases the efficiency and boosts the performance of the business, especially the accounting department that is very crucial in any organization (Quattrone &Hopper, 2006). With this capability essential business strategies and decisions are made in hour’s time compared to many days or weeks in the traditional systems, especially the analysis of financial reports. SAP also ensures higher gain of Return on Investments (Escobar-P et al, 2010). This is mainly because of the rapidness with which it can be implemented costing less than other traditional system implementation procedures (Quattrone &Hopper, 2006). As a result, the implementation time as well as cost is greatly reduced through leveraging on defaults already present and the different packages that can be integrated differently (Sternad et al, 2014). SAP increases every IT infrastructure’s capabilities (Escobar-P et al, 2010). The reliable modules have an outstanding role to play, are supported by modern technology and the ability to customize and configure them to meet various needs (Hawking, 2010). There is also accuracy and efficiency in data entry as warnings are provided when there is discrepancy or any time some amendments are made (Hart & Snaddon, 2014). This reduces redundant entry of data as well as the risk of malicious entry of data into the system compared to human entries that have led to scandals. In addition, SAP is secure since all the data inside are only accessed by authorized staff who are given passwords that are interchanged frequently. The system also has a multilayered security system that reduces the chances of data corruption by virus and worms. The organization can tailor the graphical user interface to meet the requirements of their staff. This improves the performance of the employees exponentially as they are able to access what they want on the screen (Hart & Snaddon, 2014). The major challenge facing SAP implementation into business processes is the integration of Sap processes with the non SAP related processes (Escobar-P et al, 2010). Failure to do this leads to malfunctioning of the system and to its worst may lead to it pulling to a halt thus bringing all organizational operations to a standstill (Escobar-P et al, 2010). Escobar-P et al (2010) agree with Hawking (2010), that the cost of purchase, installation and maintenance of the system is very high. However, considering the aforementioned benefits, the cost is not something to worry about too much. From an accounting stand point, there is much dependence on the computer such that where the computer fails to make accurate reports, the whole process is repeated manually and might take a long time to complete. Recommendations The processes within an organization are very crucial for its positioning in the list of better companies. With the rise in globalization, there is the need to keep pace with the changing technology and the corresponding adjustments. Financial report analysis and reporting is a practice that is very crucial for large organizations regardless of where they are. To maintain high standards in financial performance of the organization, it is necessary to implement the SAP within the organization. With this comes the advantage of flexibility, organizational workflow, risks and costs reductions, improved financial performance as well as corporate governance, and enhanced productivity and image of the organization among others (Quattrone &Hopper, 2006). In this case the human resource, traditionally undertaking the job that is now offloaded by the system, can concentrate in areas that require human expertise (Quattrone &Hopper, 2006). The SAP ERP system is very effective when it comes to operations (Hawking, 2010). This is supported statistically by the number of customers who have already bought the system as well as the countries that are currently allowing the system to be implemented in different businesses. Despite the above realized challenges, there are also an equal number of measures in place to mitigate them (Hawking, 2010). However, any good system in the market regardless on the use has associated cost challenge, so does SAP ERP system (Hawking, 2010). The only advantage that covers on the cost of maintenance is that through rapid implementation techniques, the cost and time saved can be used to address the other cost thus balancing the IT department’s expenditure. To join the rest of well mapped companies in terms of operations due to use of SAP ERP system, aspiring companies should make a point of integrating their needs with this system (Sternad et al, 2014). There are also other similar ERP systems, in the market from which organizations can choose from. Conclusion SAP system is one of ERP systems that have been in existence since 1972. The system has received appreciation in the business world and is gaining wide acceptance in large multinational corporations as well as small businesses. There are many advantages or rather benefits of using SAP in any business. The benefits are however stained by challenges that are mainly associated with cost. However, any aspiring business should risk investing in SAP ERP or any other ERP systems that have been proved to be the best in the market. The report illustrates the issues that make it necessary invest in SAP in form of its benefits. Bibliography Berdie, A.D, & Osaci, M. 2012, “Comparing the Web Business Applications using the SAP Business Transaction Analysis”. Procedia-Social and Behavoiral Sciences, 62, 45-51. Escobar-P, Escobar-Rodr, & Monge-Lozano, P. 2010, “ERP Systems in Hospitals: A Case Study”. Journal of Information Technology Research, 3, 4, 34-50. Hart, C. A., & Snaddon, D. R. 2014, “The organizational performance impact of ERP systems on selected companies”. South African Journal of Industrial Engineering, 25, 1, 14-28. Hawking, P. 2010, “Implementing ERP Systems Globally: A Case Study”. International Journal of Strategic Information Technology and Applications, 1 (3), 26-35. Quattrone, P. &Hopper, T. 2006, “What is IT?: SAP, accounting, and visibility in a multinational organization”. Journal of Information and Organization, 16(3), 212-250. Sternad, Z. S., Sharma, K., & Bobek, S. 2014, “Attitudes of SMEs toward business solution implementation- empirical survey”. American Journal of Economics and Control Systems Management, 4, 2, 24-29. Yusuf, Y., Gunasekora, A., & Abthor, M. S. 2004, “Enterprise Information Systems Project Implementation: A case Study of ERP in Rolls-Royce. International journal of Production Economics, 87(3), 251-256. Read More