INTEGRATED CASE STUDY

ACB11BLA
PREPARED FOR: PROF DR JAMALIAH SAID
PREPARED BY:
KHAIRUL BAHRIAH BINTI AYOB

2012586271

NORSUHAIDA BINTI DAHALAN

2012533873

NORFADILAH BINTI MUHAMAD MANAWARY 2012937683

NURUL NADIA BT HJ ABD SHAFID

2009956671

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TABLE OF CONTENTS
1.0

SWOT ANALYSIS -----------------------------------------------------------------------

3-5

2.0

FEASIBILITY ANALYSIS -------------------------------------------------------------

6-14

3.0

GANTT CHART --------------------------------------------------------------------------

15-16

4.0

IS TERMINATION LIM IS A RIGHT DECISION?---------------------------------

17

5.0

HOW TO OVERCOME STAFF RESISTANCE -------------------------------------

18-19

1.0 SWOT ANALYSIS

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Strength
Any implementing of new system required the economy feasibility as baseline project
plan. The purpose is to identify either the companys financial benefits or costs associated
with the implementing of SAP. Economic feasibility also referred to as cost benefit analysis. It
is very important to identify or it will be impossible for conduct a sound economic analysis
and determine whether SAP is more feasible than another. We need to review worksheets that
can use to record costs, cash flows, benefits and techniques for making cost benefit
calculation. These worksheets are used for decide whether the SAP is relevant for
implementing.
Meanwhile, for implementation SAP, we can determine whether it can provide benefit
for ATLAM. A new system, 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. The
opportunities of implementation SAP could improve ATLAM to be more efficiency, speed and
flexibility because can access data quicker and good for decision making.
The implementation benefit can be dividing into tangible benefit and intangible
benefit. Tangible benefits are benefit which can be measured in currency. Tangible benefit can
be seen for the implementing SAP is increasing efficient of activity and reduction on error
because there is a segmental reporting such divisional profit and loss, variance analysis.
Intangible benefit means that benefit not measured by currency. The intangible benefit can get
for ATLAM such improvement of employee self-motivate, quality of employee in learning
and understanding new tasks and more timely information.
In operational feasibility, when SAP is implementing, it can fit the business model in
ATLAM. As ATLAM current is using system that cannot generate the financial reports. When
ATLAM is implementing SAP, it can make the system be more efficient because SAP provide
segmental reporting.

Weakness
Other than the benefit, we also have to determine SAP disadvantages, such as the cost
incurred. The cost that include in the development of SAP to implementation of SAP that cost
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RM5,000,000; new hardware that cost RM 1,000,000; training costs RM 1,272,550; and
customization work RM 72,840. We can also dividing out the cost into tangible cost and
intangible cost. Tangible cost is hardware costs, labour cost, and operational costs from
employee training. Intangible cost is loss of customer goodwill, employee morale and
operational inefficiency.
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 project size. Implementing SAP system will be a high risk on the project for
ATLAM. The projects have limited time around 7 weeks for the project team member to set
up and manage it. It will impact to the team member because it will have high stress on it.

Opportunities
SAP system project 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. Then, it will have two group of people related to which is development group and
user group. The project will have a high risk on the development group meanwhile the user
will have low familiar with the SAP system because never use it before. But, ATLAM will
provide training for employee to reduce the risk of implement SAP system.
Lim has said that some of staff has never used the PCs in the department. Implementing SAP
system will eventually expose the staff learning to use the system with the right data to
produce the right report by the training provided.

Threat
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
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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.
Gopal 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. A change in work
processes and culture is not easier because employee already familiar with the work scope
they do the same thing every day. Other than that, 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 shown 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.

2.0 FEASIBILITY ANALYSIS

For implementing SAP our group decides to choose several feasibility factors that can be
determined whether to proceed with implement SAP or not. There are:i.

Economic feasibility
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Economic feasibility is required for baseline project plan. The purpose for
assessing economic feasibility is to identify financial benefits and cost 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 benefit and cost related to implementation. Next we review worksheet
that can use to record costs and benefits and techniques for making cost benefit
calculation. These worksheet are used for decide whether the SAP is valuable for
implementing.
Besides, 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 increases speed of activity
and reduction on error because there is a segmental reporting such divisional profit
and loss, variance. For intangible benefit can get for ATLAM such improvement of
employee morale, broader societal implication, promote ATLAM learning and
understanding and more timely information.
ii.

Operational feasibility
Operational feasibility is a process of examining the likelihood that the project
will attain its desired objectives. The purpose 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 current system
they cannot produce financial reports. Thus when they implementing SAP, it can make

the system be more efficient because SAP allow complex segmental reporting.
iii. Technical feasibility
Technical feasibility 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
system. As for ATLAM case, it is must identify and evaluate whether SAP system
will perform effectively, reliable and capability of resources to utilize SAP system.
Other than that, the risk assessment to access technical risk level of SAP system will
be based on the following:
a. Project size
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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. Moreover during
implementation, ATLAM left limited time which around 7 weeks for the
project team to manage it and it will have stress on it.
b. Project structure
When ATLAM is implementing SAP system, PETRA group will provide
applicable system for ATLAM. Even the user representative, Lim whose is
disagree and refuse for 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 its which is development group and user group. The project will
have a high risk on the development group meanwhile the user will have low
familiar with the SAP system because never use it before but they can conduct
training for employee to reduce the risk of implement SAP system.

iv. Schedule feasibility

Schedule feasibility is consider all potential time frames and completion date
schedule can be met and the meeting these date will be sufficient for dealing with
needs of the organization. For ATLAM, schedule should with the duration of SAP
system before it is fully implement like Gantt Chart and time frame. The scheduling
risk should also evaluate for possibility of happen of improper function of SAP system
since the project is lack of time.
v. Political feasibility
Political feasibility is about understanding how key stakeholder within the
organization view to proposed system. This is due to an information system may affect
the distribution of information within 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
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importance thing is overcome the resistance change of ATLAM staffs because they are
parties whose will do their job with SAP system.

Capital budgeting analysis

Capital budgeting is the process of planning for purchases of the long-term assets. This
technique focuses on cash flow rather than profits. This is mean that it will identify the cash
inflows and outflows rather than revenues and expenses flowing from the investment. In the
analysis, we assume that depreciation is 34% for the six years based on reducing balance
method, internal rate of return is 25%, discount rate is 10% and marginal rate is 28%. This
analysis including:

i.

Initial Investment
Initial investment is 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 calculation of initial investment of implementation of SAP:

Initial Investment

RM

Hardware

2,000,000.00

Initial software license

1,000,000.00

Training costs

1,271,550.00

Customization work

72,840.00

TOTAL

4,344,390.00

The initial investment that needs to pay the implement of SAP is RM 4,344,390.00
which more expensive if compared to ACCPAC. Although the initial investment is
huge but it gives a lot of cost saving in term accounting time and efficiency cost,
technical expertise cost saving and process and procedures cost savings as well for
long-term period.

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ii.

After- Tax Cash Flows For Year 1 Through 6

Year 1
RM

Year 2
RM

Year 3
RM

Year 4
RM

Year 5
RM

Year 6
RM

600,000.00
900,000.00

400,000.00
1,200,000.00
500,000.00
1,200,000.00

800,000.00
1,400,000.00
900,000.00
1,500,000.00

1,200,000.00
1,600,000.00
1,200,000.00
1,500,000.00

1,600,000.00
1,800,000.00
1,500,000.00
1,500,000.00

2,000,000.00
2,000,000.00
1,800,000.00
1,500,000.00

1,500,000.00

3,300,000.00

4,600,000.00

5,500,000.00

6,400,000.00

7,300,000.00

Cost of Training

100,000.00
300,000.00
60,000.00
500,000.00

150,000.00
160,000.00
420,000.00
120,000.00
260,000.00
800,000.00

200,000.00
180,000.00
490,000.00
130,000.00
300,000.00
900,000.00

225,000.00
560,000.00
560,000.00
140,000.00
340,000.00
1,000,000.00

250,000.00
600,000.00
600,000.00
150,000.00
380,000.00
1,100,000.00

250,000.00
640,000.00
640,000.00
160,000.00
400,000.00
1,300,000.00

Total Costs

960,000.00

1,910,000.00

2,200,000.00

2,825,000.00

3,080,000.00

3,390,000.00

Earning before tax and depreciation

Depreciation cost (34%)
Net book value after depreciation

540,000.00
1,477,092.60
2,867,297.40

1,390,000.00
974,881.12
1,892,416.28

2,400,000.00
643,421.54
1,248,994.75

2,675,000.00
424,658.21
824,336.53

3,320,000.00
280,274.42
544,062.11

3,910,000.00
184,981.12
359,080.99

Earning before tax

Tax fate (28%)
Earning after tax
Depreciation reversal

(937,092.60)
(262,385.93)
(674,706.67)
1,477,092.60

415,118.88
116,233.29
298,885.59
974,881.12

1,756,578.46
491,841.97
1,264,736.49
643,421.54

2,250,341.79
630,095.70
1,620,246.09
424,658.21

3,039,725.58
851,123.16
2,188,602.42
280,274.42

3,725,018.88
1,043,005.29
2,682,013.59
184,981.12

After-tax cash flows

802,385.93

1,273,766.71

1,908,158.03

2,044,904.30

2,468,876.84

2,866,994.71

Savings:
Accountant's time and efficiency
Technical expertise cost savings
Process and procedures cost savings
Working capital saving
Total Savings
Costs:
Average SAP license cost
Cost to convert old data to new data
Cost of Overheads
Cost of system maintenance and firewalls
Cost of hardware expansion

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iii. Payback Period

Payback period is a method that estimated the amount of time required for cash
flows generated by investment to repay the cost of the investment. This analysis
provides insight liquidity of the investment.

Year

Cash Flow
RM

Cumulative Cash Flow

RM

0
1
2
3
4
5
6

(4,344,390.00)
802,385.93
1,273,766.71
1,908,158.03
2,044,904.30
2,468,876.84
2,866,994.71

(4,344,390.00)
(3,542,004.07)
(2,268,237.36)
(360,079.33)
1,684,824.97
4,153,701.81
7,020,696.52

To determine the remaining period:

Payback period
= 3 + (Balance left in year 3 / Cash flow in the year 4)
= 3 + (360,079.33 / 2,044,904.30)
= 3.18 years or 3 years and 3 months
Therefore, the payback period for implementation of SAP is 3.18 years. This mean
that AHLAM will able to recover the cost of initial investment for SAP in 3.18
years which the cash flows generated by SAP equal to its initial investment
RM4,344,390. This also shows ATLAM can move into profit and do not need beat
the cost of implementing SAP after 3.18 years.
iv. Net Present Value (NPV)
NPV gives a truer picture of the profitability of potential investment by explicitly
taking into consideration the size and timing of all the cash flow associated with the
proposed investment. It involves discounting a stream of future cash flows back to its
present value.
Year
1
2
3
4
5
6

Cash Flow
RM
802,385.93
1,273,766.71
1,908,158.03
2,044,904.30
2,468,876.84
2,866,994.71
Total Present Value

PVIF
10 %
0.9091
0.8264
0.7513
0.6830
0.6209
0.5645

Present Value
RM
729,449.05
1,052,640.81
1,433,599.13
1,396,669.64
1,532,925.63
1,618,418.52
7,763,702.77
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Net Present Value (RM) = PV Initial Outlay

= RM 7,763,702.77 RM 4,344,390.00
= RM 3,419,312.77
Based on the calculation above, the value of NPV is positive so that SAP is
desirable to implement in the company.
v.

Internal Rate Of Return (IRR)

Internal rate of return is the rate of return from capital investment. In other
words, IRR is the discount rate that make 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:

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Year

0
1
2
3
4
5
6

Cash Flow
RM

(4,344,390.00)
802,385.93
1,273,766.71
1,908,158.03
2,044,904.30
2,468,876.84
2,866,994.71
TOTAL

PVIF

25%
Present Value
RM

1.0000
0.8000
0.6400
0.5120
0.4096
0.3277
0.2621

(4,344,390.00)
641,908.74
815,210.70
976,976.91
837,592.80
809,001.56
751,565.46
487,866.17

PVIF

27%
Present Value
RM

PVIF

29%
Present Value
RM

1.0000
0.7874
0.6200
0.4882
0.3844
0.3027
0.2383

(4,344,390.00)
631,799.94
789,736.94
931,543.58
786,064.36
747,275.63
683,289.22

1.0000
0.7752
0.6009
0.4658
0.3611
0.2799
0.2170

(4,344,390.00)
622,004.60
765,438.80
888,884.24
738,438.19
691,115.88
622,140.72

225,319.67

(16,367.57)

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Interpolation:
Rate 1 - IRR =
Rate 1 - Rate 2
27 - IRR

27 - 29
27 - IRR
-2

NPV 1 -0
NPV 1 - NPV 2
225,319.67 - 0
225,319.67 - (16,367.56)

225,319.67
241,687.23

27 - IRR

= 0.9323 x -2

IRR

= 1.8646 + 27

IRR

= 28.86%

Based on calculation above, the investment in SAP is feasible because the internal rate of
return is 28.86 % which greater than required rate of return of 25%. Thus this project is
acceptable.

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3.0 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)
SAP SYSTEMS IMPLEMENTATION
TASK

START DATE

DURATION

END

DEVELOP SAP WORKPLAN AND

22/01/2002

(DAYS)
5

DATE
26/01/2022

BUDGET
FORMING

DEVELOPMENT

24/01/2002

26/01/2002

TEAM AND EXECUTIVE

PERFORM FEASIBILITY STUDY OF

26/01/2002

31/01/2002

SAP

31/01/2002

15

15/02/2002

WITHIN

15/02/2002
20/02/2002
25/02/2002

5
5
30

20/02/2002
25/02/2002
26/03/2002

26/3/2002

01/04/2002

SAP

SAP AND CAPITAL BUDGETING

ANALYSIS
CONFIGURATION

OF

SYSTEM
PILOT TESTING
TRAINING EMPLOYEE
IMPLEMENT

NEW

ORGANIZATION
PREPARE ANALYSIS REPORT

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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.
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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4.0 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 PCs 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 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. Zulkifli cannot simply terminate Lim because Lim has
some specify knowledge that other people dont have. If Zulkifli terminate Lim because Lim
disagree with his opinion, the staff wouldnt 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.

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5.0 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.
1) COMMUNICATE EARLY
Before implementing the SAP system, Zulkifli first and foremost need to communicate
with the ATLAMs 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 its occurring.
2) COMMUNICATE OFTEN
Change is difficult for people to accept especially when it involves areas of expertise
and prerogative. Thats why Zulkifli and the other steering committee need to make
sure they are being as open as possible and communicating consistently about whats
happening. Newsletters, town hall meetings and email updates are just a few of the
tactics they can use to make sure ATLAMs staffs are well informed, and the rumour
mill isnt taking over. Other than that, Zulkifli also need to seek their feedbacks.
3) EXPLAIN WHATS IN THE SAP SYSTEM FOR THEM
It is important to explain why SAP system need to be implemented and discuss how it
will affect ATLAMs staffs. Focus on how the changes will improve the companys
performance and help ATLAMs staffs perform their work. At the same time, Zulkifli
shouldnt shy away from talking about the bad and the ugly. If it will make things
more difficult for individual ATLAMs staffs, consider offering incentives or
additional support.
4) ENSURE MANAGEMENT BUY-IN
A 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.
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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
5) PROVIDE ADEQUATE TRAINING
Not all ATLAMs 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 ATLAMs staffs cope well with the
changes and make a smooth transition to the new order.
6) GET THEM INVOLVED
Every 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 benefitting from their expertise, but you
will be bringing them on the side. They can even be your champions, helping fellow
ATLAMs staffs become comfortable with the new technology.
7) BLOCK THE EXITS
Once the project director of SAP system had communicated with the
ATLAMs staffs, sought their feedback, its 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.

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