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Background:: Sap: HR Financ Posoft: HR Financ

In this report I have tried to analyse the pros and cons of implementing a new system with reference to two ERP solution packages SAP and PEOPLESOFT. The advantage of implementing automation is to add value and company may reduce on fixed costs and add customers to its bag.

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sumi_desh
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47 views5 pages

Background:: Sap: HR Financ Posoft: HR Financ

In this report I have tried to analyse the pros and cons of implementing a new system with reference to two ERP solution packages SAP and PEOPLESOFT. The advantage of implementing automation is to add value and company may reduce on fixed costs and add customers to its bag.

Uploaded by

sumi_desh
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Background:

My Company Namz Solutions got a good turn over last year and in a process of implementing a more robust lean process inside the company, the top level management thought of automating the entire system and the decision analysis was given to me. The advantage of implementing automation is to add value and company may reduce on fixed costs and add customers to its bag. In this report I have tried to analyse the pros and cons of implementing a new system with reference to two ERP solution packages SAP and PEOPLESOFT. The decision scenarios are as follows: 1) The automation can be started with HR practices as prototype and extending to other operations. 2) If the HR implementation is a success, the company can go ahead with Finance automation as well or leave with HR implementation alone considering the risk in automating Finance. 3) On the other hand if HR implementation is a failure, company can start implementing the finance automation since the resources like license were already available or can abandon the project on a whole consi dering the risk in automating Finance. 4) If the company want to implement the automation either with SAP or PEOPLESOFT steps 2 and 3 will be common in both perspectives, despite the risk and amount averted in the project.

Implementation Costs:
SAP: HR - 600000 Finance 600000 PeopleSoft: HR 600000 Finance 600000

-1-

It is clearly noted from the decision tree that if the implementation is a failure, then over all failure cost is $1.2M.

Folding back the tree


We find that the total revenue generated could be $2.5M with a successful implementation. The involved cost is $1.2M for resources and license costs. The mutually exclusive nodes being H&I, J&K as well as B&C.Therefore the net revenue would be $1.3M. At the same time the net loss would be $1.2M due to fai led implementation. The EMV for node E is $840,000. The EMV s are calculated based on the given probabilities as shown in the table below. From the analysis made in decision tree it can be seen more value addition is possible when SAP is implemented for automating both HR and Finance. The pay off table is shown as below. The successful payoff paths being ACGK and ABDH

Sensitivity Analysis
In the foregoing discussion, the pay-off values were derived from historical experience comparing similar environment conditions. Despite these differences, the ranking of the decision alternatives are frequently not highly sensitive to changes within plausible range. Suppose, if I believe that there is a 70% higher chance of failure by the SAP implementation with 30% chance of success. Then, our EMV would be less than the above mentioned assumptions, as now $282,000. So, the above assumptions appear appropriate for maximizing revenue.

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