Keda's Sap Essay

Keda’s SAP Implementation

1. How did the information systems changes introduced by Keda align with changes in business and organizational strategy?

Firstly, we identified Keda’s business and organizational strategy to see the changes brought by information systems. Keda’s business strategy is to be a world leader in global ceramics machinery industry. The company focuses on innovation by offering a broad products of materials machinery. Therefore, Keda main business functions are “research and development(R&D), purchase of raw materials and parts, inventory management, production for assembly line and workshop processes, logistics, and sales and marketing”.(Page 2) Keda realizes that integration of data is needed within the organization. The teams were decentralized and were not well informed with decision making data. Departments such as production, sales, and business management were working individually. The Enterprise Resource Planning (ERP) System with modules such as customer relationship management (CRM), office automation (OA) and
supply chain management (SCM) will help to centralize related data for the entire business. This will reduce cost from decisions mistakes, proper inventory management, efficiency in production.

2. ERP projects are expensive and risky. Why did Keda decide to embark on an ERP implementation project?

The ERP implementation cost 10 million Chinese Yuan . Keda decided to embark on ERP because they want to be a global leader and were facing issues with data accuracy and management. The company spent a lot of time in data preparation and ERP will assist them in reducing cost and time. Their current MRP 2 solutions cannot be customized to Keda’s current business needs so they have to look for an alternative solution. Keda’s competitors were using solutions from vendors to gain competitive advantage. They have to take the opportunity to create a sustainable competitive advantage to realize their business strategy. In addition, the Chinese government were pressuring the industry to computerize their operations.

3. Leadership plays a pivotal role in the success of ERP projects. What can we learn from IS governance practices at Keda?

The Vice Manager, Zhu believes that ERP was more about people than technology. Thus they make sure they hire employees that understand the essentials of the operations in meeting the organization needs. Higher management gain support from various departments and valuable employees to commit to the project. Head of departments and senior managements were arranged to work together with the IT department where they have to attend every meeting. At the beginning, the ERP implementation team attempted to make team members work after office hours but were resisted by unsatisfied employees. Thus, Keda provided compensation to employees using a reward system for those who work extra hours. Another practices we can learn is the clear role definition and assignment of responsibilities to team members. The management also take action by firing those that do not have interest in implementing the ERP System and not cooperating with providing information.

4. Culture plays an important role in any project implementation, and perhaps especially for an ERP implementation because the ERP concept originated in a western cultural setting. How were Keda’s cultural challenges leveraged in bringing about project success?
They were several cultural challenges in accepting the ERP implementation to the Chinese context.
Some employees and higher management resist the change of technology because they are not confident that ERP will improve business operations and improve performances. The deviation from norm and adaptation change is difficult. Besides, they were power struggle between departments as they are not willing to share resources. Those department are used to working independently and desired to set up their own workshop. Their actions and resistance conflicts with the ERP workflow system. Also, employees need approval and directions from senior management before carrying out task. It is difficult to oppose what senior management decided. Despite those challenges, the project was successful because Keda stick to their strategic goals in implementing the system. A promotion and reward system motivates employees to adapt to the
changes.

5. How successful was Keda in aligning business needs with IT supply? What lessons can we apply from this case study to other organizations?

Keda was partially successful in certain areas such as achieving data accuracy in production planning and inventory management by integrating data from multiple plants. The productivity improved from 85 percent to 98 percent. Other areas that benefits from the business and IT alignment are improved market responsiveness, improve production capability, improve product delivery time, increase monthly financial reconciliation time, decrease stock holding cost and cost controlling in developing foreign markets. Lessons we can learn is that integration is essential to increase efficiency and productivity. Goals, responsibilities and expectations have to be clearly defined to avoid ambiguity of project. Hiring the right people and getting the right support is important as planning will make the company successful with a well-established structure.

6. How can Keda use their ERP system to create sustainable advantages?
The ERP system help Keda in making informed business decision in foreign and local market with improved data accuracy. Information has become transparent throughout the organization thus reducing redundant activities.