Pak Elektronic Limited

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Case Report
Pak Electronic Limited: Converting Systems to ERP

Executive Summary

Pak Elektron Limited (PEL), a large manufacturer of consumer home appliances and power transformers, initiated an information system conversion to a Tier 1 enterprise resource planning (ERP) system in 2007. After the Phase I of implementation by 2011, Pak Elektron was facing a liquidity crisis that hindered implementation of further modules. Legacy systems were still being widely used, and staff had grown uncomfortable and resistant to change.

The contents of this case report include problem identification, decision criteria evaluation, alternative analysis, and recommendation. Those aforementioned sections will address Pak Elektron’s problems in their project management, their budget forecasting and planning, their financial support, and their human resources and information system implementation. Based on those problems and our analysis, four alternatives were identified, and the option of a Phased Module ERP implementation was recommended.

Pak Elektron Limited (PEL) had over a hundred different systems being used internally, mostly in-house developed stand-alone applications, with some multi-user applications interspersed. Independent operations and systems promoted the lack of integration and standardized reporting, as well as poor quality and timeliness of data. Beginning in 2007, PEL had started converting its information systems to Oracle’s EBS Tier 1 ERP system.

Problem Identification

Project Management:
Since the resignation of Atif Ameen, PEL has lacked a project champion with extensive experience in IT operation and system implementation. In addition, the estimated implementation period had extended beyond the proposed 2 years, which has increased cost and economic uncertainty for the company.

Budget Forecasting and Planning:
PEL had poor budget forecasting and analysis, which resulted in insufficient short-term assets to support the purchasing of necessary equipment, training costs, and consultancy costs.

Financial issues:
PEL faced a short-term liquidity crisis, and did not have the financial means for full system implementation. To mitigate this, some bank loan repayments were restructured in 2010 to conserve cash flow in response to the liquidity crisis

Human Resources:
Staff were resistant to a systems change. New skills were required, which meant that staff’s expertise with the legacy systems were inconsequential. Morale was low, which resulted in experienced staff leaving the company. Likewise, the IT department encountered a mismatch between current and needed skill set, resulting in new hires and increased project duration due to this transition. Salary discrepancies with old staff and new hires also resulted in high turnover within the IT department

Information Systems Implementation:
The implementation process was ineffective and inefficient. PEL needed to spend extra resources to run parallel implementation, as numerous system functions were not supported.

Evaluative/Decision Criteria:

Cost: infrastructure, systems, implementation, maintenance: (40%) Cost is the most important decision criterion for PEL. Due to the numerous financial problems that the company has experienced, including a liquidity crisis, it is important that the proposed solution is cost-efficient with regards to infrastructure support, purchasing new systems, implementing systems, and supporting system maintenance.

Integration among business silos and processes: (35%)
PEL has 25 branches in Pakistan, therefore, communication between the branches and with the central database is necessary. The solution needs to support or improve the integration of as to allow PEL to shorten the time required to obtain useful information for timely decision-making. In addition, the solution needs to link up all the branches with the central database in a better network structure as to reduce the internal e-mail traffic....
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