Erica C. Borres BSAIS – 4 ERP 411 [06:00 – 07:30 pm | FS] Let's start implementing an ERP system in the company that you have selected. Things to do: 1. Find a company where you will implement the ERP system. Mondelez International, formerly known as Kraft Foods is an American company that is a multinational confectionery, foods and beverage conglomerate. They have over 100,000 employees around the world and own many different brands. They have the global snack and food brands of the former Kraft Foods to whom they used to be known as. The split from Kraft foods happened in October 2012 and then they started using the name Mondelez which at that time came from the input of the Kraft Foods employees. Mondelez International's portfolio includes several billion-dollar brands such as Cadbury (acquired in 2010) and Milka chocolate, Toblerone, Oreo cookies and Trident gum. The company, with annual revenue of about $36 billion, operates in more than 80 countries. 2. Create the rationale ERP Acquisition Rationale Mondelez is now in need of a new ERP system to encompass its Cadbury branch assets. We need to streamline operations across all Cadbury commercial interests to achieve more dynamic and transparent communications with a positive impact on administrative management cost savings, but most of all to respond to the need to distribute Cadbury products quickly and ensure better consumer satisfaction. A new system to improve its business and how it operates will be both cost effective and expandable to their future growth. By implementing a new enterprise resource planning system with little customization, Mondelez will need to align Cadbury with its other subsidiaries to enable business functions with one cost effective system, instead of having different systems from different vendors. The need for a single ERP system from a single vendor will be both easily expanded as well as add the capability to the company’s legacy assets to the new system in order to keep costs at a minimum, as long as it meet the minimum requirements needed to run the system. With the new system, Cadbury will be able to track inventory, perform cost analysis easily, and to streamline their systems to become more cost efficient as well as reduce the time constraint. The ERP system can enhance Cadbury’s processes integration by allowing various functions and business developments to work together, which then enables continuous innovation from new solutions being able to be built and deployed, increase productivity, and reducing the total cost of ownership (TCO) of the ERP system overall. SAP Netweaver is a software solution that enables Cadbury to integrate its business process, people and technology efficiently. The ERP system is a technical solution provided by SAP to build enterprise service-oriented architecture through the integration of people, process and technology. The people integration capability means bringing various people together to work efficiently, the process integration capability by providing support for coordination or flow of process between departments, divisions, or even companies, and lastly the technology integration bringing together applications from SAP or non-SAP, across different technology and consolidation of information from various applications into a single architecture. SAP Netweaver consists of six core modules that function interdependently to provide a solid platform for integrating business process functionality. The separate modules are unified within the SAP Netweaver scalable main server and accessible through the enterprise portal. The portal unifies all these applications so user can find and access any and all the modules in our comprehensive interface. The interdependent modules that compromise SAP Netweaver are Application server, Enterprise, Mobile infrastructure, Business intelligence, Master data Management and Exchange Infrastructure. The two basic aspects underpin the challenge for Mondelez International involved in the rollout of a new ERP for Cadbury. The organization need close cooperation to maintain operating with their business partners to achieve quality commercial and logistic information. It requires the ongoing analysis of the data generated by the application on the basis of the different messages received daily, since it is a smart management tool. Therefore, there is a need for improved tools and technology that support company continuous innovation and dynamic IT landscape while keeping the total cost of ownership low. Also, the most important benefit of a new ERP is the ability to provide support for company strategic management, decision making, long term planning, and comprehensive reporting. Cadbury aims to strengthen its position in foreign markets and expand its product offerings, while strengthening its current position by increasing efficiency throughout all business activities; recognizing the continuous innovation taking place in the business and the need to adapt to them rapidly and effectively. The transition from the present system to the new ERP system can be quite challenging. The challenges faced by this project are not small by any means; a large system change such as this can be time consuming. For instance, the employees and users may find it difficult to adopt, adjust and become fully accepting of the implementation of the new system and there could be financial constraints that need to be addressed; however, it is important that Mondelez take appropriate measures to address the current situation and by setting a proper timeline and objectives, the implementation of the new ERP system can be achieved successfully. Furthermore, a smooth transition from the current system to an ERP system will be ensured to not disrupt the daily operations of Mondelez. A proper timeline and schedule shall be discussed including the financial constraints. Training will be provided to the employees during and after transition to ensure a successful transition. 3. Select the org's champion and what is your strategy in making sure that the champion will really be called champion. An organization champion’s role is an informal one that has almost symbolic value. The organization’s champion is responsible for maintaining the interest and enthusiasm in the team that brought the initial implementation to successful completion. Every company needs an ERP champion to keep that vision alive and lead the company forward to new competitive strengths from smarter, better information management. The true ERP champion drives the effort forward and takes responsibility for achieving the goals. The organization’s champion is the person within an organization who takes on the burden of ensuring everyone involved is on board and behind the ultimate success of the ERP implementation. A lot of what the organization’s champion does involves communicating up and down the corporate structure, helping to make the executive commitment visible to the team and the all future users of the new system, and keeping the executives informed of the project’s progress, accomplishments, challenges, and needs. It’s a two-way street and the organization’s champion, no matter his or her actual position in the company or designated role in the project, is the primary link that keeps the information flowing. The organization’s champion for Mondelez International is its CIO; he has relevant fields of study are information technology, business information systems, or management information systems. To make sure everybody in the company is on the same page, it is a good idea for the CIO to shift focus from IT strategy to business strategy and leadership –for the duration of the ERP implementation. When employees are clear about what to expect in terms of future change, the company will be well-positioned to achieve all expected business benefits from the ERP system. When the CIO works closely with their ERP software partner, this is where we tend to see the most success. The CIO does have a unique perspective due to their strategic knowledge which allows them to pick up on issues no one else would spot. 4. Conduct Risk analysis of all risks areas. ERP Risk Assessment The function of risk analysis is to investigate on the risk factors in order to provide a deeper understanding of the risk features which enables a more reliable estimation of the probability of occurrence, interrelationships and impact in order to determine the influence of risk factors on the system as a whole. Risk factors, in fact, form a cumulative effect on one or more aspects of the project and it is easier to mitigate risk events if they can be bunched in groups and preferably dealt at a higher level in the long run than focusing on one particular risk event. This is conducted to carry out risk assessment of the ERP system in order to get factors affecting ERP performance and to find risk matrix of ERP application along with risk controls and risk mitigation techniques. Financial Risk Installing an enterprise system is an expensive and risky venture. Large companies have been spending on the order of hundreds of millions of dollars to make the technical and business changes associated with enterprise systems. This area includes studying the payoffs from investment in information technology, IS project success and failure, and IS implementation process and change management. Technical risk Enterprise systems are technically challenging. Technical risks are related to the technology concerning the implementation of the ERP systems and associated with the critical questions of the system performance. The technical areas include: “development” life cycle for enterprise system packages; software selection approaches; enterprise modelling and software configuration tools and techniques; “reference models” for particular industry segments, systems integration strategies, and systems and software architectures; and data quality, reporting, and decision support for enterprise systems. Project risk Project risks stem from the customization of purchased packages and the difficulty of interfacing with legacy systems. When firms believe their business process are unique, they may customize ERP software instead of adopting best practices imbedded in a standard implementation. Data conversion can also be a problem when firms do not clean up their data before embarking on a project. Project leadership, limiting project scope, avoiding customization, and a phased implementation (rollout) can minimize this risk. Political risk Political risk occurs if a dominant coalition attempts to use the ERP package as a means by which to impose its views on other functional areas. Cultural risks Cultural risk is a potential occurrence. Global organizations need to become aware of cultural differences in primarily developing countries to deploy their ERP system successfully. Otherwise, these organizations can be failed if the ERP system is not sufficiently tailored to those countries' cultural and industrial norms. A set of difficulties that negatively have an impact on the implementation of ERP systems in a cultural context as follows: (1) limited employee involvement, (2) language and communication difficulties, (3) consistency of local laws and regulations, (4) strong hierarchy (losing face of local managers; the necessity to respect the company hierarchy), (5) national characteristics. Additional factors that also affect the implementation of ERP systems is the mismatch of globally used technologies with local culture, lack of ownership culture, management of culture, reluctant to change in cultural views, considering cultural fragmentation in the marketplace, regarding the readiness of culture, the existence of multiple subcultures, diversity of information flows, communication culture, sectoral differences, discrimination of gender, and impatience of culture. Business disruption risk ERP systems touch almost every part of the organization’s operation especially if the company is embarking on a major upgrade; keep in mind that staying ahead of business disruption requires proactive planning, communication and collaboration. The use of ERP systems and digital innovation adds to the likelihood of disruption. This can cause parts of the business to stop abruptly if not properly tested. Contingency risk A contingency risk is a potential occurrence of a negative event in the future, such as an economic recession, natural disaster, fraudulent activity, terrorist attack, or a pandemic. Software failure risk Software failure can have more serious effects. For businesses that rely on software systems to keep things up and running, a system failure can stop production, interrupt processes, and ultimately lead to financial losses. There is no question that comprehensive software systems are a blessing to companies; yet with their added convenience and profitability also comes the risk of software failing in a way that hurts a company’s bottom line. Given modern companies’ reliance on systems such as enterprise resource planning (ERP), it is important to be smart about failure prevention. Non-use, misuse risk Non-use, underuse, misuse risk occurs when the intended users do not use the ERP system or do not use it sufficiently or in a manner that would lead to the intended benefits, inappropriate use, etc. External risk External risk centers on litigation associated with the implementation. Firms with implementation problems may sue consultants and/or ERP vendors. Over-billing by consultants and use of incompetent trainees have been sources of litigation. Competitive risk Competitive risk stems from negative reactions by customers, competitors, suppliers, etc. Reputation risk Reputation risk is the threat to the profitability or sustainability of a business or other entity that is caused by unfavorable public perception of the organization or its products or services. Reputational risk can occur in the following ways: directly, as the result of the actions of the company, indirectly, due to the actions of an employee or employees or tangentially, through other peripheral parties. Reputation risk involves negative reactions by the public at large, the media, the government, etc.
