Systems Applications and Products (SAP) is an effective tool of Enterprise Resource Planning (ERP) in Data Processing. It is developed by the German company, and today, it is widely used across the world, as the most effective business management software tool. Today, because of complexities involved in business operations, customers' increasing expectations from the product and the services of the organization and ever increasing competition and operating costs, most of the medium to large scale organizations use this centralized enterprise management system, SAP-ERP, which is an answer to all their problems and issues.
An organization has several departments, like sales, marketing, production planning, HR, Finance & Accounts, Inventory or Warehousing (with Receiving section and Dispatch Section) Manufacturing, Quality Assurance and Research & Development. All the operations of these departments are linked together towards accomplishment of organizational objective of generating required revenues for the company. SAP is an integrated software which links various organizational units and functions together so that the orders are executed in time without any chances of failures of delays and production planning is able to manage the inventories at optimum level so that manufacturing and production does not suffer as SAP provides information in real time.
SAP increases the productivitiy of the organization, reduces any chance of bottleneck in terms of stockouts. It improves inventory management, reduces material costs, improves customer satisfaction, thereby increasing the profitability of the company.
IMPLEMENTATION OF ERP BY IBM
IBM, a very bing conglomerate, having several offices across the world, has a complex business model. Such a gigantic business models are impossibly difficult to run and manage the entire show effectively on a decentralised mode across the globe. In the absence of a centralised ERP solution, such complex businesses might actually collapse or go in for a toss as consolidation of data becomes increasingly difficult as the time passes and company grows. IBM rightfully realised the need of adopting a centralised data processing software system, SAP, to tackle the problems it had been facing before the implementation and to secure a better system oriented and system managed organization. IBM become the second largest SAP implementation company in terms of number of users.
This large scale successful implentation of SAP into IBM system is a result of several factors, which may be briefly discussed here. The Top Management Commitment is the foremost factor without which the idea of adopting SAP into IBM's internally strong but decentralised and localised systems, would have been impossible. Top Management was motivated enough to strongly consider SAP as the only alternative integrated module which could lead the organization to further ladders of success. After the strong commitment of the top management, the next important factor was a strong project management team. SAP implementation team comprised of senior and mid management level employees who were working at different departments at different locations. The project management team selection was a major decision, where team member's skills, their motivation levels, dedication, hard work and sincerity, played the crucial role. This followed the creation of hundreds of users at different levels, places and departments across the globe. The next important issue was the effective communication of team members with the users, where the team members were responsible to motivate and train the users in order to plan the entire implementation of SAP at all levels.
In a nutshell, we can pen down certain points which highlight the benefits of implementation of SAP by IBM:
1) Increased Productivity, avoiding data duplication
2) Cost Savings
3) Better Customer Satisfaction, customer interaction and service
4) Effective Supply Chain Management
5) Increased Revenue, reducing overheads
6) Reduced Wastages & redundancy at all levels
7) Auto updated Centralised Database for sales planning, production planning, procurement planning, inventory planning, finance and accounts planning.
8) Accurate Data Available in real time
9) A high quality Vendor Management Planning
CHALLANGES FACED BY IBM DURING IMPLEMENTATION OF ERP
IBM, while implementing SAP, had to go through tough times as there were several challanges the team faced during the implementation phases which we can discuss briefly here:
1. Data consolidation and Integration: Since IBM has been present in several countries, prior to the implementation of SAP, all different units of IBM were using different enterprise solutions which were developed locally as per the prevailing market conditions in that particular country or place. There were several locally developed software modules like SCM (supply chain management), PLM (product life cycle management), CRM (customer relationship management), etc. Therefore, there were several software systems which had tons of data which was to be consolidated. Also, in many cases, the company had acquired some other business units and had mergers which resulted in further complicated data to be dealt with.
2. Training: Since IBM as separate/decentralised units, had been working based on different software systems, the users were accustomed to a particular mindset of the way they were using the software with the new integrated system of SAP. There was a need to train them as per the new ERP system so that they can learn the system and the transfer of data from the old system to the new ERP can be done smoothly. This was a challanging task, as it becomes a hill task to change the mind set of the old horses.
3. Timely Implementation: Implementing the new SAP across the globe in the given time period was a big challange as the operations were running and new and new data was being generated and it was becoming difficult to cope up with time during this transition phase.
4. Employees Retention: During the transition phase, IBM had been training the users vigorously to successfully implement the new ERP, but, there were challanges of employees leaving the organization thereby hampering the work.
Although IBM faced so many other challanges as well, like increased maintenance costs in the implemetation of new ERP, but, the above mentioned challanges were the main ones. Fortunately, IBM was able to manage the transition phase quite successfully within the set time frames and successfully implemented new SAP throughout its offices across the globe.