Big Bang: An Sap Implementation, Research Paper Example

It is imperative for any business or enterprise to have an adequate system of filing, organizing, and transferring data relating to sales, orders, human resources, accounting, and planning. Without a system in place, a business could potentially lose out on sales revenue due to inadequate book keeping and inaccurate inventory data. Although it is possible to run such a system through paper files and books, it is much more logical and cost effective to have a computer based information system in place, especially for larger businesses. This was the case for the NIBCO business as presented in the case study.

NIBCO Incorporated is a private manufacturer of pipes and valves. Their headquarters is in Elkhart, India. At the time of their pivotal change in information systems technology, NIBCO had proven to be a successful business. Employing over three thousand associates by 1996 and annual revenues reaching $461 million, NIBCO was making their mark in the manufacture of pipe lines. However, that same year, NIBCO management decided that the business needed to integrate a brand new information system into their management as the previous one was outdated and rendered obsolete.

NIBCO began the process of converting to the SAP R/3 enterprise resource planning system, which was the name of the information system that would allow the business to manage their books, inventory, supply chain management, payroll, and human resources much more efficiently. The approach that NIBCO was taking towards this technological equipping of the SAP R/3 was referred to as the “big bang” approach. This approach governed that the project would lapse through a 15 month process which would implement the SAP R/3 in NIBCO’s ten plants and four distribution centers. The cost for this project was an estimated $17 million USD.

There were both pros and cons throughout all the phases of the SAP R/3 project. The project was headed by three major figures referred to as the TIGER triad, TIGER being an acronym for Total Information Generating Exceptional Results. Scott Beutler was in charge of the business process; Gary Wilson was in charge of the technological aspect, while Jim Davis was in charge of change management. This team of experienced leaders contributed to ensuring the process of integration would carry minimal errors.

In the summer of 1996, the enterprise resource planning (ERP) team suggested to the executive leadership team (ELT) that NIBCO should purchase the SAP R/3 system. Initially, the project was to be completed and launched the Monday after Thanksgiving weekend 1997. However, the process was delayed and launched later in December; still meeting the general deadline of year end 1997. NIBCO had ended up selecting IBM as a consulting firm and partner for the project.

The cost for integration of the SAP R/3 of $17 million was 30% higher than initial estimates due to management costs, education, and third party consulting. Not only was it a more expensive project than what NIBCO though, but it also carried business risks. Integration needed to be successful for all departments of NIBCO. The SAP R/3 project was intensely laborious and took priority of other NIBCO initiatives, which ultimately slowed business down for the time being. The project also forced employees to pick up extra work just to keep operations running normal during the process of integration.

Although the duration of the project carried the most cons in slowing down business and cutting out of NIBCO’s capital, the post-project results made business flow much more efficiently than before. Accounting operations were more effective centralizing accounts payables that were previously decentralized to plants before the project. Customer data was well documented due to the SAP R/3 system.

It is recommended based on these findings in the case study that NIBCO keep their information systems up to date as they did in the mid 1990’s. The latest version of the SAP is the SAP ERP 6.0 version. NIBCO should adopt this information system if they haven’t already. It is also recommended that NIBCO regularly assess their management structure. It was noted in the case that management’s idea is to keep things running simple and fast. Then as employees ease their way into the integration of the acquired information systems, they could begin to learn and utilize the complex features and functions. This concept may also be applied to future major changes in management as they keep up with economic and technological trends.

References

Brown, DeHayes, Hoffer, Martin, & Perkins. (2012). Managing Information Technology. Upper Saddle River, NJ: Prentice Hall.