Case 7 complete

SAP for ATLAM BKAL3063

Table of Contents1.0 Introduction........................................1

2.0 Problem Statement...................................2

3.0 Feasibility Analysis................................4

4.0 Capital Budgeting Analysis..........................8

4.1 Initial Investment.................................9

4.2 After-tax Cash Flows for Years 1 through 6........10

4.3 Payback Period....................................11

4.4 Net Present Value (NPV)...........................12

4.5 Internal Rate of Return (IRR).....................13

5.0 Gantt Chart........................................15

6.0 Is Termination Lim is a Right Decision?............17

7.0 How to Overcome Staff Resistance...................18

8.0 Conclusion.........................................20

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1.0 Introduction

Akademi Teknikal Laut Malaysia (ATLAM) was established on

15 August 1981 as to train and prepare Malaysians for the

maritime industry which was located in Melaka and

Terengganu. ATLAM was wholly owned organization of MICT

Berhad. Based on the study conducted in 1997 by the World

Maritime University, they found that ATLAM had a poor IT

infrastructure compared to Europe and Japan. This is

because ATLAM was relied on a customized single-user

system which was solely for accounting entries, and it is

not functioned to generate financial reports.

The 1997 privatisation of ATLAM to become a

subsidiary of PETRA Group of Company has provided it with

an access to better IT facilities. In year 2001, the

management had been asked to upgrade accounting system

with the PETRA group-wide SAP system. SAP was an

integrated business application package that covered most

functions of an organization. This system included

comprehensive functions of financial accounting,

controlling, asset management, sales and distribution,

materials management, human resources, plant maintenance,

project system, BASIS system and so forth.

Therefore, the Finance and Accounts Manager of

ATLAM, Zulkifli Osman, has been asked to review the plan

of implementation the SAP in ATLAM and decide whether

they can upgrade their accounting system. He had to

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assess the risk associated with the decision as the

implementation of SAP system seems to be giving big

impact on the company’s financial status.

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2.0 Problem Statement

Issue 1: SAP or ACCPA for ATLAM

One of the important issues we need to be discussed is

making the right choice by ATLAM between SAP and ACCPA to

establish the campus-wide network. ATLAM need to consider

their fund, facilities and expertise in order to make

good decision making. The implementation of SAP will

create many challenges, risks and higher cost said by

Zulkifli and Lim in the article.

Despite from that, there is lack of assets, such as

Personal Computer for install the SAP. Lastly, the key

personnel of ATLAM involved in implementation phase do

not have expertise in using SAP. In order to success in

implementation phase expertise person need to assess on

issue might occur during the phase. Those three problems

should be considered by project team before proceed with

the project.

In order to evaluate the sufficiency of

implementation of SAP system project, we are advised

that ATLAM could throughout feasibility study and capital

budgeting analysis to evaluate and analysis the valuable

and feasibility of SAP system project in organization.

Issue 2: Termination of Lim

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In the case of SAP for ATLAM, Lim was having conflict on

opinion with Zulkifli when discussing the matter of SAP

system in ATLAM. Lim was disagreed to implement the SAP

system in ATLAM because he know there is extreme factors

will faced such as low of fund, lack of expertise, and

short of facilities. He relies on his experience in ATLAM

then suggests that need to use ACCPAC system rather than

SAP system.

These contribute to the conflict when Zulkifli was

very unsatisfied with Lim’s behaviour and intended to

kick him out of the project team. Kamal advise him that

the critical ideas of Lim is good for organization since

he was very experienced in such related industry. He,

advised Zulkifli to reconsider on the termination of Lim.

Issues 3: Resistance to Change

This resistance to change issue refers to developing a

new accounting system with the PETRA group-wide SAP

system. Zulkifli as Finance Manger concern that whether

ATLAM’s employee would be ready to embrace the new

system. We found that there are several reasons the ATLAM

is resistance to change at that time. Most reasons are

their lack of information about SAP system and also lack

of knowledge about this system. This is, creating the

misunderstanding between Lim and Zulkifli. Lim

understanding is SAP system is only suitable for

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manufacturing industry and this system was costly

compared to ACCPAC.

In other hands, ATLAM is resistance to change

because they are facing the lack of resource to implement

SAP system which are need a lots of funds,

equipment’s, spaces, and intelligence resources.

The project team members were complaint they are not

enough Personal Computers in the departments to make this

practical to them. Then they do not even have the space

available to house the system, some of the employee

in ATLAM have never used a Personal Computer before and

lack of the knowledge about information technology.

Furthermore, employees are also fear of loss power

when change the system in ATLAM operation. For

information, ATLAM is a PETRA subsidiary and has to link

its system to PETRA’s to match with their group reporting

structure. Due to this reason, ATLAM’s employees are fear

of loss of the power to control the system operating and

their old job also will be separately divided to each

other’s. They are worried that may change their role and

responsibilities.

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3.0 Feasibility Analysis

First of all, we can found that most of the information

system project has budgets and deadlines. For ATLAM, it

is not exception. Assessing project feasibility is

required for the implementing of new system. So, for

implementing the new system that is SAP is requires a

system analyst, evaluate a wide range of factors. For

implementing on SAP, our group decides choose several

feasibility factors that are important toward the

implementation.

3.1 Economic feasibilityEconomic feasibility is required for baseline project

plan. The purpose for assessing economic feasibility is

to identify financial benefits and costs associated with

the implementing SAP. Economic feasibility is often

referred to as cost benefit analysis. During project

initiation and planning, it will be impossible to define

precisely all benefits and costs related to

implementation. Yet, it is important that identify and

quantify benefits and costs, or it will be impossible for

conduct a sound economic analysis and determine whether

SAP is more feasible than another. Next we review

worksheets that can use to record costs and benefits and

techniques for making cost benefit calculation. These

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worksheets are used for decide whether the SAP is

valuable for implementing.

Meanwhile, for determining the implementation

benefits, we determine whether the SAP can provide

benefit for ATLAM. A new or renovated IS which is SAP

allow complex segmental reporting, provision for

integration of data, system maintenance and support were

possible, audit points raised during procurement process

might be resolved with provision of Materials Management

Module. Thus, SAP could improve ATLAM to be more

efficiency, speed and flexibility because can access data

quicker and good for decision making.

Beside, the implementation benefit has been dividing

into tangible benefit and intangible benefit. Tangible

benefits are benefit which can be measured in dollar.

Tangible benefit can be seen for the implementing SAP is

increase speed of activity and reduction on error because

there is a segmental reporting such divisional profit and

loss, variance analysis. For intangible benefit, it means

that benefit cannot easily measured in dollar. The

intangible benefit can get for ATLAM such improvement of

employee morale, broader societal implication, promote of

ATLAM learning and understanding and more timely

information.

Other than determine the benefit, we also have to

determine SAP cost. The cost that include in the

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development of SAP such implementation of SAP that cost

RM5,000,000; new hardware that cost RM 1,000,000;

training costs RM 1,272,550; and customization work RM

72,840. Meanwhile, we can also dividing out the cost into

tangible cost and intangible cost. Tangible cost is

hardware costs, labor cost, and operational costs from

employee training. Intangible cost is loss of customer

goodwill, employee morale and operational inefficiency.

3.2 Operational feasibility Operational feasibility is a process of examining the

likelihood that the project will attain its desired

objectives. The goal of this study is to understand the

degree to which the proposed system will likely solve the

problem or take advantage for the opportunities outlined

in the system service request or project identification

study. For ATLAM, when SAP is implementing, it can fit

the business model in ATLAM. As ATLAM current is using

system that cannot produce financial reports. Thus, when

ATLAM is implementing SAP, it can make the system be more

efficient because SAP allow complex segmental reporting.

But, Gopel has said that the implementing SAP system

is about not only change on technology, it also about a

change in work processes, culture and habits. The change

is work processes and culture is hard because employee

already familiar with the work scope they do every day.

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In addition, it is about change mind in employee for

employee job roles that has been in their mind for few

years. The existing operations and support infrastructure

of ATLAM cannot handle the SAP system. It has show that

the implementing SAP system has high risk in term of

operational risk and impact on ATLAM operation. So, the

support from PETRA and appropriate training is important

in order to affected staff in ATLAM to make the

implementation be operationally feasible.

3.3 Technical feasibility Technical feasibility understands the development

organizations ability to construct the proposed system.

This analysis should include an assessment of the

development group understanding of possible target

hardware software and operating environment to be used,

as well as system size, complexity, and group experience

with similar systems. As for ATLAM in implementation of

SAP system, it is a must for identify and evaluate

whether SAP system will perform effectively, reliable and

capability of resources to utilize SAP system. In

addition, the risk assessment to access technical risk

level of SAP system will be based on the following:

a) Project size

For implementing SAP system, it is said that it is a

large project for ATLAM. As Zulkifli who is Finance

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Manager also said that this is a unique and challenges

on implementing SAP system. As the large the project

is, there will be a high risk on the project. The

project will have an impact for ATLAM when

implementing it. As the project is large and left

limited time which is around 7 weeks for the project

team member to manage it, it will have high stress on

it. The project team member consists of five persons

which is Sani as Project Manager, Gopal as User

Project Manager, Lim as User Representative, Kamal as

Funtional Analyst and Zulkifli as Finance Manager.

b) Project structure

For the requirement of SAP system project, it is

highly structure and is well define have a lower risk.

When ATLAM is implementing SAP system, PETRA group

will provide applicable system to ATLAM. Even the user

representative, Lim whose is disagree and refuse for

the implementation of SAP system, it still need follow

what have been decide because it is under control as

ATLAM management have highly commitment through the

system.

c) Development group and User group

When ATLAM implement SAP system, it will have two

group of people related to it’s which is development

group and user group. The project will have a high

risk on the development group meanwhile the user will

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have low familiar with the SAP system because never

use it before. But, ATLAM can conduct training for

employee to reduce the risk of implement SAP system.

3.4 Schedule feasibility Schedule feasibility is consider the likelihood that

all potential time frames and completion date schedule

can be met and that meeting these date will be sufficient

for dealing with the needs of the organization. For

ATLAM, there should access schedule feasibility before

implement SAP system. Schedule should with the duration

of SAP system before it is fully implement at ATLAM. The

gantt chart should be use on schedule the activity that

need complete within 7 weeks. Other than Gantt Chart, the

user and support infrastructure should available for

feasible project scheduling. The most important for them

to deal with is the resistance of staff to change.

Other than Gantt Chart, a time frame also needed for

implement of SAP system that involve in 7 week. The

scheduling risk should also evaluate for the possibility

of happen of improper function of SAP system since the

project is lack of time. Since the cost is significant,

ATLAM staff should be prepared well to accept SAP system.

3.5 Political feasibility

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Political feasibility is about understanding how key

stakeholders within the organization view the proposed

system. This is due to an information system may affect

the distribution of information within the organization,

and thus the distribution of power, the construction of

an IS can have political ramifications. Those

stakeholders not supporting the project may take steps to

or block disrupt or change the project intended focus.

For ATLAM, the key stakeholder is their own staff. The

most important thing is to overcome the resistance change

of ATLAM staffs. Because staff is the parties whose will

do their job with SAP system. If they refuse to change

will disrupt the project that implement.

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4.0 Capital Budgeting Analysis

Implementation of a new system is not a simple process. A

company should have proper planning before implementing a

new system and consider whether it is a desirable project

that can bring benefits to the company. In this case,

ATLAM plan to upgrade its accounting system with the

PETRA group-wide SAP system. So, ATLAM has to plan and

analyze to ensure that the implementation of SAP is

feasible and can bring maximum benefits to the company.

To determine whether implementation of SAP in ATLAM is a

desirable project, we decide to perform a feasibility

analysis in capital budgeting.

Capital budgeting is the process of planning for

purchases of long-term assets. This technique focuses on

cash flows rather than profits. This is means that it

will identify the cash inflows and cash outflows rather

than revenues and expenses flowing from the investment.

In order to determine whether ATLAM should implement

SAP, we will do some capital budgeting analysis which is

including:

1. Initial Investment

2. After-tax Cash Flows for Years 1 through 6

3. Payback Period

4. Net Present Value (NPV)

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5. Internal Rate of Return (IRR)

In this analysis, we assume:

Depreciation is 34% for six years based on reducing

balance method.

Required internal rate of return is 25%.

Discount rate is 10%.

Marginal tax rate is 28%.

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4.1 Initial InvestmentInitial investment is the cost incurred to enter a

project. It is important to understand how much it cost

to start and run a project in order to determine the

feasibility range. Below show the calculation of the

initial investment that would incur by ATLAM in the

implementation of SAP:

Initial Investment RM

Hardware 2,000,000.00

Initial software licence

1,000,000.00

Training costs 1,271,550.00

Customisation work

72,840.00

Total 4,344,390.00

The initial investment that need to pay for the

implementation of SAP is RM4,344,390 which is more

expensive if compared to ACCPAC. Although the initial

investment is huge and it is impossible for ATLAM to bear

the SAP implementation costs, but it gives a lot of cost

saving in term of accountant time and efficiency cost,

technical expertise cost saving and, process and

procedures cost savings as well for long-term period.

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Year 1 Year 2 Year 3 Year 4 Year 5 Year 6Savings: RM RM RM RM RM RMAccountant's time and efficiency -

400,000.00

800,000.00

1,200,000.00

1,600,000.00

2,000,000.00

Technical expertise cost savings

600,000.00

1,200,000.00

1,400,000.00

1,600,000.00

1,800,000.00

2,000,000.00

Process and procedures cost savings -

500,000.00

900,000.00

1,200,000.00

1,500,000.00

1,800,000.00

Working capital savings 90

0,000.00 1,200

,000.00 1,500

,000.00 1,500

,000.00 1,500

,000.00 1,500

,000.00

Total Savings 1,500

,000.00 3,300

,000.00 4,600

,000.00 5,500

,000.00 6,400

,000.00 7,300

,000.00 Costs:

Average SAP licence cost - 15

0,000.00 20

0,000.00 22

5,000.00 25

0,000.00 25

0,000.00 Cost to convert old data to new data

100,000.00

160,000.00

180,000.00

560,000.00

600,000.00

640,000.00

Cost of overheads 30

0,000.00 42

0,000.00 49

0,000.00 56

0,000.00 60

0,000.00 64

0,000.00 Cost of system maintenance and firewalls

60,000.00

120,000.00

130,000.00

140,000.00

150,000.00

160,000.00

Cost of hardware expansion - 26

0,000.00 30

0,000.00 34

0,000.00 38

0,000.00 40

0,000.00

Cost of training 50

0,000.00 80

0,000.00 90

0,000.00 1,000

,000.00 1,100

,000.00 1,300

,000.00

Total Costs 96

0,000.00 1,910

,000.00 2,200

,000.00 2,825

,000.00 3,080

,000.00 3,390

,000.00

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Earnings before tax and depreciation

540,000.00

1,390,000.00

2,400,000.00

2,675,000.00

3,320,000.00

3,910,000.00

Depreciation cost (34%) 1,477

,092.60 97

4,881.12 64

3,421.54 42

4,658.21 28

0,274.42 18

4,981.12 Net book value after depreciation

2,867,297.40

1,892,416.28

1,248,994.75

824,336.53

544,062.11

359,080.99

Earnings before tax (937

,092.60) 41

5,118.88 1,756

,578.46 2,250

,341.79 3,039

,725.58 3,725

,018.88

Tax rate (28%) (262

,385.93) 11

6,233.29 49

1,841.97 63

0,095.70 85

1,123.16 1,043

,005.29

Earnings after tax (674

,706.67) 29

8,885.60 1,264

,736.49 1,620

,246.09 2,188

,602.42 2,682

,013.59

Depreciation reversal 1,477

,092.60 97

4,881.12 64

3,421.54 42

4,658.21 28

0,274.42 18

4,981.12

After-tax cash flows 80

2,385.93 1,273

,766.71 1,908

,158.03 2,044

,904.30 2,468

,876.84 2,866

,994.71

4.2 After-tax Cash Flows for Years 1 through 6

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The after-tax cash flows for the implementation of SAP is

RM 802,385.93 in year 1, RM 1,273,766.71 in year 2, RM

1,908,158.03 in year 3, RM 2,044,904.30 in year 4, RM

2,468,876.84 in year 5 and RM 2,866,994.71 in year 6.

4.3 Payback PeriodPayback period is a method that estimates the amount of

time required for the cash flows generated by the

investment to repay the cost of the investment. This

analysis provides insight into the liquidity of the

investment. An investment with shorter payback period is

preferred.

Year Cash FlowCumulative Cash

Flow RM RM

0 (4,344,3

90.00)

(4,344,390.00)

1 802

,385.93

(3,542,004.07)

2 1,273,

766.71

(2,268,237.36)

3 1,908,

158.03

(360,079.33)

4 2,044,

904.30

1,684,824.97

5 2,468,

876.84

4,153,701.81

6 2,866,

994.71

7,020,696.52

Recall the initial outlay is RM 4,344,390.00. Up to

year 3, the accumulated cash flow is RM 3,984,310.67.

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Hence, it is requires RM 360,079.33 which is show at the

calculation above to cover the initial investment.

To determine the remaining period:

Therefore, the payback period for the implementation

of SAP is 3.18 years. This means that ATLAM will be able

to recover the cost of initial investment for SAP in 3

years and 3 months which the cash flows generated by SAP

equal to its initial investment, RM 4,344,390. This also

shows that ATLAM can move into profit and do not need to

bear the cost of implementing SAP after 3 years and 3

months.

4.4 Net Present Value (NPV)NPV gives a truer picture of the profitability of a

potential investment by explicitly taking into

consideration the size and timing of all cash flows

associated with the proposed investment. It involves

discounting a stream of future cash flows back to its

present value. According to (A.Ross, D.Jordan, & Mazlan,

2007), an investment should be accepted if the value of

19

Payback Period = 3 + (Balance left in year 3 /

Cash flow in year 4)

= 3 + (360,079.33 / 2,044,904.30)

= 3 + 0.18


net present value is positive and rejected if it is

negative.

Year Cash Flow PVIF Present Value RM 10% RM

1 80

2,385.93 0.9091 729,

449.05

2 1,273

,766.71 0.8264 1,052,6

40.81

3 1,908

,158.03 0.7513 1,433,5

99.13

4 2,044

,904.30 0.6830 1,396,6

69.64

5 2,468

,876.84 0.6209 1,532,9

25.63

6 2,866

,994.71 0.5645 1,618,4

18.52

Total Present Value 7,763,7

02.77

Net present value (NPV) = RM 7,763,702.77 – RM

4,344,390.00

= RM 3,419,312.77

The present value is RM 7,763,702.77 and the initial

outlay is only RM 4,344,390.00, hence the net present

value is RM 3,419,312.77. Based on the calculation above,

the value of NPV is positive. This illustrate that SAP is

desirable to implement in the company.

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4.5 Internal Rate of Return (IRR)Internal Rate of Return is the rate of return from the capital investment. In other words, IRR

is the discount rate that makes NPV equal to zero. With the NPV analysis, the IRR can be

compared to a required rate of return to determine whether the company should accept the

investment. An investment with IRR that greater than required rate of return may be accepted

while it may be rejected if IRR less than required rate of return.

By using trial and error method:

25% 27% (Rate 1) 29% (Rate 2)Year Cash Flow PVIF Present Value PVIF Present Value PVIF Present Value RM RM RM RM

0 (4,344,390.00) 1.0000

(4,344,390.00) 1.0000

(4,344,390.00) 1.0000

(4,344,390.00)

1 802,385.93 0.8000

641,908.74 0.7874

631,799.94 0.7752

622,004.60

2 1,273,766.71 0.6400

815,210.70 0.6200

789,736.94 0.6009

765,438.80

3 1,908,158.03 0.5120

976,976.91 0.4882

931,543.58 0.4658

888,884.24

4 2,044,904.30 0.4096

837,592.80 0.3844

786,064.36 0.3611

738,438.19

5 2,46 0.3277 0.3027 0.2799

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8,876.84 809,001.56 747,275.63 691,115.88

6 2,866,994.71 0.2621

751,565.46 0.2383

683,289.22 0.2170

622,140.72

487,866.18

225,319.67

(16,367.56)

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Based on the calculation above, the investment in SAP is feasible

because the internal rate of return is 28.86% which is greater

than the required rate of return of 25%. Thus, this project is

acceptable.

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Interpolation:

Rate1−IRRRate1−Rate2 =

NPV1−0NPV1−NPV2

27−IRR27−29 =

225,319.67−0225,319.67−(−16,367.56)

27−IRR−2 = 225,319.67241,687.23

27−IRR−2 = 0.9323


5.0 Gantt Chart

A gantt chart is a horizontal bar chart developed as a production

control tool in 1917 by Henry L. Gantt, an American engineer and

social scientist. Frequently used in project management, a Gantt

chart provides a graphical illustration of a schedule that helps

to plan, coordinate, and track specific tasks in a project. Gantt

charts may be simple versions created on graph paper or more

complex automated versions created using project management

applications such as Microsoft Project or Excel.

From this case, we are using excel as a tool to create

ATLAM gantt chart. The reason we choose this tool since by

using excel it is more affordable rather than use a software

like smart sheet which will be costly toward company.

AKADEMI TEKNIKAL LAUT MALAYSIA (ATLAM)GANTT CHART

SAP SYSTEM IMPLEMENTATION

Task StartDate

Duration(days) End Date

Develop SAP workplan and budget 22/01 5 26-Jan-02

Forming SAP development team and executive 24/01 3 26-Jan-

02Perform Feasibility study of SAP and capital budgeting analysis 26/01 6 31-Jan-

02

Configuration of new SAP system 31/01 15 15-Feb-02

Pilot Testing 15/02 5 20-Feb-02

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Training employee 20/02 5 25-Feb-02

Implement within organization 25/02 30 26-Mac-02

Prepare Analysis Report 26/03 7 01-Apr-02

Develop SAP workplan and budgetPerform Feasibility study of SAP and capital

bugeting analysisPilot Testing

Implement within organization

22/01

19/02

19/03

16/04

Based on the above table, we already show steps that

involve in ensuring the successful implementation of SAP.

The Gantt chart above constructed with a horizontal axis

representing the total time span (days) of the SAP

implementation project in each task and a vertical axis

representing the tasks that make up the SAP implementation

project. There is 8 step involve in this project which is

first is they have to develop work plan and budget. This

task take about 1-5 days to finish and next is follow by

forming SAP development team and executive which will handle

this project and person to refer to. This takes about only

1-3 days and then they must perform feasibility study of SAP

and capital budgeting analysis to get understanding

regarding SAP which takes 1-6 days.

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After that they have to make a configuration of new SAP

system to ensure that the system able to give best benefit

and suitable with the current operation in the organization.

It takes 1-15 days to finish it. Next, the most important

task that needs to be done is pilot testing to ensure that

this system can be run and able to increase top management

trust toward the decision. It only takes 5 days and same

with training employee task. This task is needed, so all of

these people will have required SAP knowledge and skills or

even SAP certifications.

Then, the system that already complete will be

implement stages by stages within organization which takes

the longest period which is 1-30 days. This is to ensure

that the system can be implementing successfully. Last step

is preparing an Analysis Report to give feedback regarding

new system toward top management which only takes 1-7 days.

The time frame is from 22 January 2002 and must be finished

before 1 April 2002.

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6.0 Is Termination Lim is a Right Decision?

Zulkifli Osman is the Financial Manager in ATLAM since 1995 while

Lim is User Representative in the discussion about the new system

upgrade. When having the meeting for discuss the implement SAP as

ATLAM new accounting system, Zulkifli and Lim have different

opinion. Zulkifli believed the implementation of SAP is better

than ACCPAC but Lim strongly disagree with this opinion.

Lim thinks the SAP got a lot of weaknesses while the ACCPAC

can bring benefits to the company. Lim argues the implement of

SAP costs the company a lot (include the implementation costs and

accompanying operational costs). Company are unable to afford the

costs due to the deficit in year 2001. Besides that, Lim also

argues that the SAP is suitable for manufacturing industry but

not education industry. Additional, lack of resources (PCs) in

department and staff there are lack of PC’s knowledge and skills

also make the SAP impractical in ATLAM. However, Zulkifli

strength with his opinion and conclude the SAP will be implement

in the company because even SAP involved unique risks and

challenges, it also bring benefits to the company.

In the case SAP for ATLAM, Zulkifli was terminate Lim from

the project team because Zulkifli thinks Lim is a time waster and

the time waster cannot be in the project team. Other than that,

Zulkifli terminate Lim because Lim raised too many issues when

having the meeting and Lim was bring too many questions that

27


justify the reliability of the SAP system. Zulkifli was afraid

that Lim would influence the others with his views.

Zulkifli terminate Lim is a wrong decision because Lim was

contributed a lot when having the discussion. Lim is very

experienced and he brought the issues that are important and

should be take into consideration. Zulkifi cannot simply

terminate Lim because Lim has some specify knowledge that other

people don’t have. If Zulkifli terminate Lim because Lim disagree

with his opinion, the staff wouldn’t contribute their opinion in

the other meeting because they will scary the thing happen in Lim

will happen for them also. Zulkifli become autocratic, so even

decision by Zulkifli was wrong, no people will speak out. This

will give the serious effect to the company.

7.0 How to Overcome Staff Resistance

To ensure that SAP system can be implementing in ATLAM, Zulkifli

need to confident all the staffs that SAP system will help them

in the term of business process and all transaction will be more

effective and efficient. This is because when a company wants to

implement changes in business process and job duties, the most

resistance that need to overcome is from the staffs or the users

of SAP system. There are a few ways on how to overcome the staff

resistance.

i. Communicate Early

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Before implementing the SAP system, Zulkifli first and

foremost need to communicate with the ATLAM’s staffs. This

is because human is the element has to be a key part of the

SAP system project planning. Managers have a tendency to

underestimate how upsetting this type of change can be.

Zulkifli should begin preparing the staffs for a major

change months before, not when it’s occurring.

ii. Communicate OftenChange is difficult for people to accept especially when it

involves areas of expertise and prerogative. That’s why

Zulkifli and the other steering committee need to make sure

they are being as open as possible and communicating

consistently about what’s happening. Newsletters, town hall

meetings and email updates are just a few of the tactics

they can use to make sure ATLAM’s staffs are well informed,

and the rumor mill isn’t taking over. Other than that,

Zulkifli also need to seek their feedbacks.

iii. Explain What’s in the SAP System For ThemIt is important to explain why SAP system need to be

implemented and discuss how it will affect ATLAM’s staffs.

Focus on how the changes will improve the company’s

performance and help ATLAM’s staffs perform their work. At

the same time, Zulkifli shouldn’t shy away from talking

about the bad and the ugly. If it will make things more

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difficult for individual ATLAM’s staffs, consider offering

incentives or additional support.

iv. Ensure Management Buy-InA successful technology implementation starts with the

whole-hearted commitment of the steering committee.

Therefore, Zulkifli need to have the motives for

implementing the SAP system. Then rally the support of your

managers and the steering committee. This is because, during

the implementation, there will be lots of room for

interdepartmental discord. Therefore, Zulkifli need to make

sure that everyone is all pulling in the same direction and

delivering the same message.

v. Provide Adequate TrainingNot all ATLAM’s staffs are savvy about technology.

Therefore, to implement SAP system into ATLAM, it needs to

have effective communications and high quality training.

Training is a must for ensuring that ATLAM’s staffs cope

well with the changes and make a smooth transition to the

new order.

vi. Get Them InvolvedEvery system such as SAP has many users that will use the

system. One of the ways to overcome the resistance in ATLAM

is by involved the key users in the steering committee. Ask

for their opinions on the system requirement and then

involve them in system demonstrations. Not only will you be

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benefitting from their expertise, but you will be bringing

them on the side. They can even be your champions, helping

fellow ATLAM’s staffs become comfortable with the new

technology.

vii. Block the ExitsOnce the project director of SAP system had communicated

with the ATLAM’s staffs, sought their feedback, it’s time to

proceed. This means that any requirement requests from the

users will be vetoed. It is necessary to achieve a

successful implementation of SAP system into ATLAM. Other

than that, if there to be any changes during the

implementation it will increase the duration of time and

increase the cost.

8.0 Conclusion

After we do for the analysis and evaluate the usefulness of SAP

system project, we recommend that ATLAM should implement the SAP

system as soon as possible. The implementation of SAP system

would bring a lot of benefit for ALAM in the long term view.

From the discussion, we can conclude that SAP should be

implemented in ATLAM due to several perspectives. First of all,

the calculations of after-tax cash flow are positive in these 6

years show that this system will generate more cash than the cost

of its initial investment. Besides that, the net present value

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shows a positive value and the implementation of SAP systems

requires 3 years and 3 months only recovering the initial

investment which is acceptable due to the useful life is 6 years.

In addition, the internal rate of return is 28.86% which is

greater than the required rate of return of 25% shows that the

company should accept this project. Hence, we can conclude that

it is feasible to carry on the implementation of SAP system in

ATLAM as the benefits of implementing the system exceed its cost.

In the case of SAP for ATLAM, issue Lim was having

conflict with Zulkifli in the SAP implementation matter. In

our group opinion, when a team has difference of opinion to

resolve this conflict requires a lot of respect and patience

from both side. We hereby recommend that Zulkifli must make

the best decision to maintain the expertise in their

organization.

Zulkifli need to resolve the conflict in good manner.

He needs to prepare for the solution first by acknowledge

the conflict and find ways to communicate and discuss with

Lim properly. Then Zulkifli need understanding the situation

by clarify Lim positions, and also need to make assumption

if they in Lim side.

Last but not least is in preventing conflict, the teams

can be used such skill and behaviour that very work on, such

as dealing with conflict immediately, being open, practicing

clear communication, practicing active listening, not

letting conflict get personal, encouraging different points

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of view, not looking for blame, demonstrating respect, as

well as keeping team issues within the team.

Lastly, Lim is expertise person in organization and as a good

asset to ATLAM, we are not suggesting Zulkifli to kick Lim

out from the project team.

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Case 7 complete

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