EPR implementation in Roll Royce Company Case Paper INSTRUCTIONS There is the third of five writing assignments due this semester. Here are the instructio

EPR implementation in Roll Royce Company Case Paper INSTRUCTIONS

There is the third of five writing assignments due this semester. Here are the instructions for the assignment:

1. Read this case study: (attached)

As you read the article focus on those issues related to challenges involving the user role in the implementation.

2. Write an analysis of the case study

The analysis should highlight those aspects of the case that deal with user involvement and perception issues. It should then discuss how well you think that Rolls Royce handled each element of the two readings from this week. Specifically indicate if you feel that each of the variables was adequately managed during the ERP implementation.

Be sure to discuss all elements from the two readings (user involvement and participation, resistance, commitment, planning, risks, control-threatening nature of the system implementation). Use facts from the case and two readings to back up your analysis. DO NOT copy and paste content from Internet websites. Write the case analysis using your own thoughts and words.

Submit your written response by uploading your document so that it can be reviewed and assessed.

Writing Guidance

For our purposes this semester all written submissions should generally adhere to the following:

1. There is no need to include a separate cover page. Provide a title for the assignment and your name at the top of the first page.

2. For brevity-sake, single space your written assignments.

3. Use 1″ margins (left, right, top and bottom).

4. Indent all paragraphs (APA style).

5. Use standard 11-pitch or 12-pitch fonts.

6. For citations, use APA style. If you need some help understanding how to cite using APA format, go to this.

7. All writing should be expository format, with proper grammar, spelling and effective use of the English language.

8. Use sub-titles to organize your writing. However, your writing should not include one-sentence paragraphs or one-paragraph sub-sections.

9. Use bullet lists sparingly. We are not writing outlines.

10. Do NOT copy and paste content from the Internet. I want your thoughts. Points will be subtracted for content that is copied and pasted. Along those lines, do not plagiarize. Cite your sources. If I think something has been plagiarized I will check and if true I will direct you to the ethics policy.

11. For the best possible grade demonstrate that you have spent sufficient time on the assignment. Often it is necessary to do Internet searches to obtain additional background material. For the assignment I would like to see that you have done sufficient background research, that you have read the instructions and that you have spent time reflecting on the task and thoughtfully constructing your written response to questions and issues. ARTICLE IN PRESS
Int. J. Production Economics 87 (2004) 251–266
Enterprise information systems project implementation:
A case study of ERP in Rolls-Royce
Yahaya Yusufa,*, A. Gunasekaranb, Mark S. Abthorpec
a
Business School, University of Hull, Hull HU6 7RX, UK
Department of Management, University of Massachusetts, 285 Old Westport Road, North Dartmouth, MA 02747-2300, USA
c
Department of Mechanical and Manufacturing Engineering, Nottingham Trent University, Burton Street, Nottingham NG1 4BU, UK
b
Abstract
Economic globalisation and internationalisation of operations are essential factors in integration of suppliers,
partners and customers within and across national borders, the objective being to achieve integrated supply chains. In
this effort, implementation of information technologies and systems such as enterprise resource planning (ERP)
facilitate the desired level of integration. There are cases of successful and unsuccessful implementations. The principal
reason for failure is often associated with poor management of the implementation process. This paper examines key
dimensions of implementation of ERP system within a large manufacturing organisation and identi?es core issues to
confront in successful implementation of enterprise information system. A brief overview of the application of ERP
system is also presented and in particular, ERP software package known as SAP R/3, which was the ERP software
package selected by Rolls-Royce plc. The paper takes an in-depth look at the issues behind the process of ERP
implementation via a case study methodology. It focuses on business and technical as well as cultural issues at the heart
of the Rolls-Royce implementation. The case study also looks at the implementation time scales and assesses the
bene?ts from the project both tangible and intangible.
r 2003 Elsevier B.V. All rights reserved.
Keywords: ERP; Information systems; Implementation; Success factors; Rolls-Royce
1. Introduction
The global nature of modern marketplace
requires active players to internationalise their
operations. In the past, companies were used to
competing based on one or two competitive
performance objectives such as price and quality.
However, present markets demand both price and
*Corresponding author. Tel.: +44-1486466933; fax: +441482466216.
E-mail address: yahaya.yusuf@hull.ac.uk (Y. Yusuf).
quality in addition to greater ?exibility and
responsiveness and thus today’s organisations
must compete based on all competitive objectives.
In order to achieve such simultaneity in performance objectives, some organisations have decentralised their operations by global outsourcing of
activities. This places enormous challenge on
companies to achieve a co-ordinated and integrated supply chain. The emergence of various
information technologies such as the Internet,
electronic data interchange (EDI) and WWW
facilitate the attainment of an integrated supply
0925-5273/$ – see front matter r 2003 Elsevier B.V. All rights reserved.
doi:10.1016/j.ijpe.2003.10.004
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chain and in turn ?exibility and responsiveness in
meeting changing market requirements. Information systems such as manufacturing resource
planning (MRPII) and enterprise resource planning (ERP) in particular have gained ground in
providing support for achieving an integrated
supply chain.
Firms around the world have been implementing ERP systems since the 1990s to have a uniform
information system in their respective organisations and to re-engineer their business processes
(Rajagopal, 2002). ERP system as a packaged
software has the advantages of reduced cost, rapid
implementation, and high system quality (Lucas
et al., 1988). Although application packages have
these bene?ts over custom design software, packaged software have problems of uncertainty in
acquisition and hidden costs in implementation.
Successful ERP implementation must be managed
as a program of wide-ranging organisational
change initiatives rather than as a software
installation effort. Such IT-driven initiatives require change of the organisation’s socio-economic
system, which is intertwined with technology, task,
people, structure, and culture. Thus organisational
resistance to change is identi?ed as a critical
success factor for ERP implementation (Hong
and Kim, 2002).
Organisational ?t and adaptation are important
to implementation of modern large-scale enterprise systems that are built with pre-determined
business process methodology. As a result, customisation is a crucial, lengthy, and costly aspect in
the successful implementation of ERP system, and
has, accordingly, become a major speciality of
many vendors and consulting companies. Gefen
(2002) examines how such companies can increase
their clients’ perception of engagement success
through increased client trust, that is brought
about through respective and dependable customisation.
Considering the importance of ERP in SCM, an
attempt has been made in this paper to analyze the
implementation issues of ERP in a major UK
company. The lessons learned from this company
would be useful for other companies in their
efforts to successfully implement modern ERP
system.
2. Enterprise resource planning
In the 1990s innovations in information technology led to the development of a range of
software applications aimed at integrating the ?ow
of information throughout a company, and these
commercial software packages were known as
Enterprise Systems. During this period one particular enterprise system called ERP caught the
attention of some of the worlds largest companies.
It has been estimated that businesses around the
world have been spending almost $10 billion per
year on ERP systems. ERP aims to integrate
business processes through the support of an
integrated computer information system (O’Brien,
1999).
ERP allows the corporate management of a
business, and aims to integrate individual functional systems such as manufacturing, ?nance,
procurement and distribution. The systems allow
companies to replace their existing information
systems and also help to standardise the ?ow of
management information and have been regarded
as the next step in the evolution of MRPII. The
MRPII model actually forms the basic core of
ERP and uses similar modules, however some
ERP systems do contain certain modules that were
not originally used within MRPII such as computer aided design (CAD), distribution resource
planning (DRP), tool management systems
(TMS), and product data management (PDM)
(Yusuf, 1998; Prasad et al., 1999).
ERP uses Internet technologies to integrate the
?ow of information from internal business functions as well as information from customers and
suppliers. The system uses a relational database
management system, within client/server network
architecture, to capture valuable management
data. The key principle behind the system involves
entering the data from a series of modular
applications only once. Once stored, the data
automatically triggers the update of all related
information within the system. The systems can
support virtually all areas of an organisation,
across business units, departmental functions
and plants. The development of an ERP system
within a large manufacturing organisation requires
the integration of working practices and the
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information systems (Davenport, 1998; Mandal
and Gunasekaran, 2002).
Companies that use ERP can gain a competitive
advantage from the way they implement the
system and then exploit the resulting data. Many
companies that have installed ERP have claimed
to be more nimble within the marketplace than
their competitors with hard-to-change custom
made systems (Latamore, 1999).
ERP systems offer companies the following
three major bene?ts:
*
*
*
Business process automation.
Timely access to management information.
Improvement in the supply chain via the use of
E-communication and E-commerce.
A vital task when implementing an ERP System
is to understand the difference between functions
and modules. Functions are de?ned as actual
physical tasks that are performed within a
company. Whilst modules can be considered as
pieces of software that help to provide the
functions, different ERP vendors have different
modules that perform the functions. The enormous growth of the Internet and Microsoft
Windows packages, complementary as they are
as collaborative tools has made the argument for
ERP more compelling (Loizos, 1998). It is now a
general industry view that ERP will take them to
new heights of ef?ciency by enabling them to move
?nancial and other data speedily from one
department to another (Holt, 1999).
Companies have spent billions of dollars and
used numerous amounts of man-hours installing
elaborate ERP software systems. The ERP software vendor market has experienced rapid growth
in the late 1990s. In 1998 there were ?ve major
software vendors offering ERP solutions to
businesses worldwide. The largest of these was
SAP AG (http://www.SAP.com) who earned over
$5 billion in revenue. The Oracle Corp. was the
second largest with $2.4 billion in sales. Followed
in third place by PeopleSoft (http://www.Peoplesoft.com) who earned $1.3 billion. In fourth place
was J.D. Edwards with $979 million. And ?nally in
?fth place was the Baan Co. (http://www.Baan.
com) with $743 million in sales (Holland and
Light, 1999).
253
Van Stijn and Wensley (2001) focus on problems
that may arise after ERP systems have been
implemented—the in-use phase. Various problems
have been identi?ed regarding the ERP systems inuse. Because of the organisational unwillingness or
inability to make technology upgrades (Markus
and Tanis, 2000), the enterprise system may take
on the appearance of a legacy system in disguise.
3. Implementation of ERP
ERP when successfully implemented, links all
areas of a company including order management,
manufacturing, human resources, ?nancial systems, and distribution with external suppliers and
customers into a tightly integrated system with
shared data and visibility (Chen, 2001). Potential
bene?ts include drastic declines in inventory,
breakthrough reductions in working capital,
abundant information about customer wants and
needs, along with the ability to view and manage
the extended enterprise of suppliers, alliances and
customers as an integrated whole (Escalle et al.,
1999).
The term ERP stands for enterprise resource
planning, however it is not good enough to just
plan resources required to run the enterprise, they
need to be managed as well. An organisation must
assess itself, to see if it is ready for ERP. It must
determine if it is ready for the competitive business
environment of today and then strengthen its
position for tomorrow’s changes. Some of the
companies that implement ERP systems do not
realise the full bene?ts that the system offers
because most organisations are not organised in
the correct fashion to achieve the bene?ts. Many
companies that attempt to implement ERP systems run into dif?culty because the organisation is
not ready for integration and the various departments within it have their own agendas and
objectives that con?ict with each other (Langenwalter, 2000).
While companies such as Cisco Systems, Eastman Kodak, and Textronix have reaped the
expected bene?ts of ERP systems, many businesses
are discovering that their ERP implementation
is a nightmare. FoxMeyer Drug, a $5 billion
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pharmaceutical company, recently ?led for bankruptcy (Al-Mashari and Zairi, 2000; Chen, 2001).
Dell Computers spent tens of millions of dollars
on an ERP system only to scrap it because the
system was too rigid for their expanding global
operations (Trunick, 1999). ERP implementations
involve, in truth, broad organisational transformation processes, with signi?cant implications to
the organisation’s management model, organisation structure, management style and culture, and
particularly, to people (Wood and Caldas, 2001).
ERP software is very adaptable but not very
malleable and companies that wish to use them
correctly have to change their working practices to
?t the software. The key factor of an ERP
implementation is the way in which the software
is con?gured. The most important issue to identify
before an implementation is the ‘core’ of the
business, which can be identi?ed by the use of the
business model (Chung and Snyder, 2000).
One original motive for buying an ERP system
was to automate business processes, but the
modern view has shifted to the quick access of
up-to-date and timely management information.
The majority of dif?culties experienced by ERP
implementations have been the costly development
of additional software to help ‘bridge’ or retrieve
information from legacy systems. Before ERP
management reports can be generated and distributed to managers, the data has to be created
?rst which can be a costly and inef?cient process.
In an attempt to improve the timeliness and
accuracy of management data, many software
vendors are making end-users responsible for
updating their own information rather than
relying on IT resources.
ERP software consists of a number of modules
that link together to form a complete business
solution, however the main dif?culties experienced
by ERP users have been in manipulating the data
stored within the system. Software developers have
begun to address the need for additional information tools. Some of these tools include the need for
detailed and advanced planning and advanced
scheduling and customer relationship management. Abdinnour-Helm et al. (2003) discussed
the pre-implementation attitudes and organisational readiness for implementing an ERP system.
Huang and Palvia (2001) analyze the ERP
implementation issues in advanced and developing
countries. Umble et al. (2003) presents the
empirical ?ndings on implementation procedures
and critical success factors for ERP. Van Stijn and
Wensley (2001) address some concerns, methods
and directions for future research on organisational memory and the completeness of process
modelling in ERP systems.
Most ERP software vendors supply their
customers with an implementation programme as
part of an overall solution package. For example
SAP provides some of its customers with accelerated SAP (ASAP). ASAP suggests the adoption of
a ‘big bang’ implementation. This programme opts
for a quick implementation that is speci?cally
designed for small and medium sized companies.
‘Big bang’ implementations offer lower costs and
generally use only a few of the software’s interfaces, however the risks are greatly increased, as
less time is spent on development and assessing
business needs. There are several more papers on
ERP implementation and some of the most recent
ones include Mabert et al. (2003), Olhager and
Seldin (2003), Umble et al. (2003) and Wood and
Caldas (2001).
4. Systems, applications and products in data
processing
Five former IBM employees originally founded
systems, applications and products in data processing (SAP) in Mannheim, Germany in 1972. Their
aim was to produce standard software application
programmes that could integrate with each other
to form a business solution. SAP has been
dedicated to produce products that improve the
return on information gathered by an organisation. The company began its life with the name
‘Systemanalyse Und Programmentwicklung’ and
eventually became known as SAP.
SAP’s ?rst product known as R/2 was built and
prototyped for a subsidiary of ICI. The system
they produced was simply known as system ‘R’,
which stands for ‘Real-time’ processing. This
system was fully integrated and could be used on
the IBM mainframe. The R/2 solution was
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launched in 1979 and was developed for a
computer mainframe environment, at the time it
was perceived as the most comprehensive system
available to businesses in the world, and it received
great interest from industries in the 1980s.
SAP saw the future potential for the delivery of
information to the end-user via the PC, so SAP
reinvented and developed their product further by
developing a business solution for the client/server
architecture environment, this became known as
R/3 and was released in 1992. In the 1990s SAP
and its R/3 solution would go on to become the
dominant ERP solution, and also become one of
the worlds biggest software houses.
SAP R/3 applications are a range of software
modules. They can be used either alone or
combined to form business solutions. SAP state
that their R/3 applications offer comprehensive
functionality for all standard business needs within
an enterprise. SAP R/3 uses a programming
language called advanced business application
programming (ABAP).
The following are SAP R3’s 12 application
modules: ?nancial accounting, treasury, controlling,
enterprise controlling, investment management, production planning, materials management, quality
management, project system, human resource management, sales and distribution, and plant maintenance and service management.
5. Rolls-Royce—case study
In this section, a case study conducted at RollsRoyce investigating the implementation of ERP
(SAP) is discussed. The case study starts with
introducing the company and its background,
presenting the status of IT before and after the
implementation of SAP, and giving the detail
chronological phase of the implementation of SAP
in Rolls-Royce. Also, the research methodology is
discussed. The implementation of SAP in the
company and project risks is presented.
5.1. Company background
Rolls-Royce returned to the private sector in
1987 and acquired Northern Engineering Indus-
255
tries in 1989. This acquisition allowed Rolls-Royce
to consolidate its capabilities in the area of
industrial power. A further acquisition was made
in 1995 when Rolls-Royce bought the Allison
Engine Company in the United States, thus
enlarging the company’s presence in aero propulsion and industrial gas turbines. The acquisition
allowed Rolls-Royce a major foothold within US
markets. The most modern family of engines is the
Trent series, which are also powerful three-shaft
turbofan engines similar to the RB211, and are
used to power the Airbus A330, A340-500/600.
The Trent series of engines offer greater thrust,
long range ?ight capabilities and economical
operating and maintenance costs. The Rolls-Royce
Power Generation Market includes both electrical
and nuclear power, which also includes marine
applications, such as providing power plants for
nuclear and naval vessels. Rolls-Royce is a truly
global business offering a range of ?rst class world
leading products. It has facilities over 14 different
countries and also offers ?rst rate after sales
services, covering mechanical overhauls and spare
part distribution. In March 1998 a new organisational structure was adopted that recognised the
strategy and the need for change to re?ect
customer requirements.
5.2. The situations before ERP
Rolls-Royce used over 1500 systems before the
ERP project was started, many of which were
developed internally by Rolls-Royce over the last
two decades. These legacy systems were expensive
to operate and dif?cult to maintain and develop.
They did not provide accurate, consistent and
accessible data that was required for good and
timely decision-making and performance assessment (e.g. delivery performance, quality metrics).
These ageing systems often did not lend themselves
fully to a modern manufacturing environment.
Some of the legacy systems were so old that they
had year 2000 compliance problems. Work within
Rolls-Royce was functionally orientated and
vario…
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