The main learning outcome for this unit addresses advanced information systems solutions. You need to be able to understand not only the concepts behind implementing an advanced solution like ERP, but also the management and technological factors involved in an implementation, the value added by implementing advanced systems, what prompts the need for an advanced system like an ERP system, and the potential benefits of implementing IS advanced systems such as ERP systems. This case gives them a successfully implemented case to analyze.
Review what you have learned about enterprise resource planning (ERP) from the textbook and from the unit’s study guide.
Analyze the case study titled “Vodafone: A Giant Global ERP Implementation” on pp. 376-378 in your textbook.
For this assignment, you will need to:
- analyze and discuss the central issue(s) faced by Vodafone, including the contributing management and technological factors;
- explain why ERP was a necessary information system solution to address the organization’s issues;
- evaluate the success of Vodafone’s implementation plan and provide one suggestion to improve the process;
- discuss the value the new ERP system brought to Vodafone as a company; and
- summarize your findings in a two to three page paper.
Unit Lesson Study Guide
Advanced Information Systems
What exactly are advanced information system solutions? Most people who have worked in an office setting have a good understanding of the processes that affect their everyday lives. They understand that the data they enter or scan is stored in a database, and certain processes they run may close out a monthly account, process a payroll run, or bill a customer. These types of processes, while they seem separate, are often very integrated.
In years past, organizations had large mainframes. These mainframes had to process transactions in batches, usually at night, and until that batch process happened, the screens you were viewing were not always completely correct. For example, you could place an order for a customer, but you would not see the order until the next day. Unfortunately, that also meant that you could not see the inventory reduction until the next day as well. This means you might place an order and there might not be any of that item left in stock at the time. A salesperson or customer service representative might have to go look at three or four differentscreens to get a good picture of the customer’s account health or to research a problem—even with this batching process. Once client-servers came to organizations, employees had to look at two completely different computers to research that same problem (until organizations could get all of their data and processes moved off of those old mainframes).
Now that businesses have grown so much, many of them have multiple product lines, systems, servers, and databases. In the past, managers would have to wait for big printouts of various reports to make business decisions. Enterprise resource planning (ERP) systems works to integrate all of those critical systems together so they can talk to each other. The applications that make up the enterprise software are created based on predefined best business practices. Think of it this way: When a business purchases a piece of equipment, that order is entered into accounting the same way for all businesses. If a customer makes a purchase, it should generally be handled the same way. When you hire someone, you have the same laws to follow. There may be some customization, but that is handled in the application as well (Laudon & Laudon, 2016).
Advanced Information System Solutions
This is the question we have to ask ourselves when adopting any sort of informUaNtIioTnxsSyTstUemDYs sGoUluIDtioEn, is it not? We do not just spend large amounts of money on something without understanding the value it offers us
as a company. We have discussed the value of data in previous chapters. Among the other reasons enterprise systems bring us value, they also help us to have firm-wide information to make better decisions.
The bottom line is this: Advanced information system solutions can help organizations in many different ways, such as operating more effectively and efficiently, making better decisions, managing our goods more effectively, reaching our customers faster, and being more competitive and innovative. Anyone can see the value in that!
What Are Some Other Advanced Information System Solutions?
Supply chain management (SCM): Many large organizations (such as Walmart and Amazon) use supply chain management (SCM) to help their organization manage their suppliers and goods more efficiently. If you have thousands of suppliers and hundreds of thousands of orders, it would be impossible to keep up with everything. SCM software can manage all of this and allows for forecasting and decision making as well. Imagine that many of your suppliers are in other countries; this means you have a global supply chain that is even more complex to manage.
Customer relationship management (CRM): Customer relationship management (CRM) involves managing customers. Again, if you have 50,000 customers, how do you keep up with what they purchased? Sure, you can store that information in a database but would it be easy to manage those relationships? How would you keep up with the marketing incentives you have offered them? Better yet, what about the marketing incentives that you want them to pass on to their customers?
Systems application products (SAP): Systems application products (SAP) are a brand of enterprise resource systems. Oracle and Microsoft both have their own brands of enterprise resource systems as well. While all of these vendors offer very similar base functionalities, each of them compete against each other by bringing their own special capabilities to their enterprise resource system offerings.
E-commerce: Another type of advanced information systems involves e-commerce. The explosion of Internet purchasing is no surprise to anyone, but the technology involved in e-commerce is pretty unique. In the past, retailers had pretty tight control over everything. The options for consumers were not plentiful. Still, word of mouth was still prevalent so a business could suffer if it did not treat its customers well. Now, retailers have invited the world to comment on their websites. Sure, they can always delete bad comments, but knowledge is power. Have you ever had a bad experience at a store and wondered if it ever got past the customer service person that you complained to? E-commerce gives retailers global reach, which can be an advantage and a disadvantage. Advanced information systems have given retailers the ability to allow customers to interact with each other through social media-style functionality. Retailers can now personalize your viewing experience based on your web searches. This type of customer targeting was not possible before more advanced information systems were developed.
We have discussed business-to-consumer (B2C) e-commerce, but there have also been many types of e- commerce, e-commerce business models, and e-commerce revenue models developed. Social media is one of the most predominant focuses of marketing today. Another focus of late is m-commerce, which is mobile commerce.
One of the biggest boons to business-to-business e-commerce is the development of electronic data interchange (EDI). This service enables the transfer of data between two organizations. For example, an organization may receive an electronic bill from a supplier through EDI. Conversely, the organization can sent a notice of payment back to the supplier via EDI. An organization can send all of its UPS shipping information to UPS in the form of an EDI file.
Would any of this be possible without advanced information system solutions? What do you think the future holds for information systems and technology as businesses grow bigger and bigger?
MBA 5401, Management Information Systems 2
Reference UNIT x STUDY GUIDETitle
Laudon, K. C., & Laudon, J. P. (2016). Management information systems: Managing the digital firm[VitalSource Bookshelf version] (14th ed.). Retrieved from https://bookshelf.vitalsource.com/#/books/9780133898309/
Case Study Vodafone: A Giant Global ERP Implementation
Vodafone Group PLC is the largest mobile service provider by revenue in the world, with 400 million customers across Europe, the Middle East, Africa, Asia Pacific, and the United States. In 2013, it had revenues of $64.6 billion and more than 86,000 employees working in over 30 countries. Since its founding nearly 30 years ago, the business has experienced phenomenal growth, largely by establishing local operating companies that provides products and services to their local markets. As a result, the company was very decentralized, lacking common practices, centralized operations, and data sharing among its various operating companies. Most of Vodafone’s mobile subsidiaries operated as independent companies with their own business processes. Vodafone was a network of individual businesses, but it wanted to function more like a single global firm to better deal with competitive pressures. Management called for a major business transformation to make this happen. In 2006, Vodafone’s board of directors approved the “Evolution Vodafone” Business Transformation Program” (EVO) designed to refashion Vodafone into a truly global company, with a centralized shared services organization and common worldwide business processes in finances, human resources, and supply chain management for all of the operating companies. (Shared services refers to the consolidation of business operations that are used by multiple parts of the same organization in order to reduce costs and redundancy.) A common SAP ERP system would provide the technology platform for these changes by supporting information-sharing and common business processes that would simplify and speed up work throughout the company. Additional software tools from Informatica, Opentext, Readsoft, Sabrix, Redwood, HP, and Remedy that could integrate with SAP were added to the mix. Vodafone’s system turned out to be one of the biggest SAP ERP implementations in the world. How did Vodafone pull it off? First of all, Vodafone’s management realized the company lacked the expertise and resources to manage such a complex project entirely on its own. It enlisted the consulting firms Accenture and IBM to provide skills and services that this ambitious project required and which were not available inside the company. The company spent a year identifying and designing its new business processes and establishing the scope of this project. The management team wanted to limit risks to non-customer-facing processes that were nevertheless important sources of value for the firm. Customer-facing front-end processes were excluded from the first phase of the rollout to keep the transformation more manageable. Procurement was targeted as the first set of processes to be transformed using the new ERP system. Vodafone had been allowing each of its local companies to manage its own procurement, which prevented it from leveraging the massive purchasing power the company could obtain by managing relationships with material and service suppliers from a single entity. By generating savings from centralized procurement, the transformation project would be able to quickly show a return on investment and win further support. Vodafone did not establish a centralized procurement department but instead created a centralized procurement company based in Luxembourg that uses the SAP ERP platform. Most of the company’s spending goes through this central organization. Suppliers benefit because the system helps them plan their sales to Vodafone and they only need to work with a single purchaser instead of many. This new way of doing business included a new purchase-to-pay process in which invoices are approved automatically for payment by matching them with purchase orders and receipts. Once the new procurement process and organization were running, Vodafone started creating a centralized shared services organization based on the SAP ERP system. It selected Budapest, Hungary as the pilot location for this new arrangement. Vodafone Hungary is a mid-sized company with 2,000 employees with a small IT platform based on Oracle software. This made Vodafone Hungary more receptive to changing its information system and business processes than Vodafone organizations in larger countries, and Hungary had already been using Oracle systems. There, Vodafone built an entire shared services organization from scratch while simultaneously implementing the SAP ERP system. Vodafone then set up two more shared services organizations in India running on SAP. After Hungary, Vodafone implemented the new procurement process and SAP software for its German operating company. Germany is Vodafone’s largest market, and accounts for more than 20 percent of Vodafone’s total revenue. Vodafone Germany is a much larger organization than Vodafone Hungary, with 13,000 employees, over 130 local legacy systems, and many customized business processes to replace. Work habits were more deeply entrenched, and Vodafone encountered some employee resistance as it tried to implement the new systems and processes. To minimize risk, Vodafone used a phased, incremental implementation, did a tremendous amount of testing, and made all the necessary system modifications before the system went live. Special support teams were dispatched to work with all the employees affected by the transition. These efforts helped address problems and employee resistance before they got out of hand. Once the German implementation was deemed successful, Vodafone rolled out the new system at many more operating companies, prioritizing the implementations based on each operating company’s size, complexity, and willingness to change. No two rollouts proceeded the same way because each operating company had unique challenges and demands. Many of these companies had grown rapidly, and had numerous legacy systems based on local requirements. There were large numbers of users, interfaces, and legal requirements to deal with. Vodafone’s project team had to balance the need to proceed rapidly with the need to ensure that the system was implemented carefully. Vodafone’s implementation plan called for a core project team to visit each individual operating company and implement the new processes locally, assisted by a systems integrator and local resources. Local teams and senior management met with the global teams, IT consultants, and local IT vendors in a friendly environment to encourage knowledge-sharing and openness to change. The success of each rollout was based on multiple factors, including the number and complexity of each unit’s legacy systems, the skills of each local project team, and the willingness of each local organization to embrace change. Vodafone enlisted the services of the global consulting firm Accenture to provide skills where needed and assist with change management in the local companies. Over time, the Vodafone project team and the Accenture consultants learned how to tailor their activities to the needs of each operating company. For example, if no representatives from an operating company showed up for the project launch meeting or they attended but showed little interest, the project team knew that company might be less cooperative. In such cases, the project would require more resources and attention. The project team also had to be sensitive to local trends as system rollouts took place. For instance, if an operating company was located in a country experiencing economic downturn, its employees might be more resistant to the rollout. Some might see a major business and technology change as an improvement in their situation, while others might see it as another thing to cope with during a very stressful time. As it finished rolling out the system to its remaining operating companies, the Vodafone project team used what it had learned to make improvements to its earlier ERP implementations. For example, testing and employee feedback revealed that more attention should be paid to usability. So, the project team enhanced the system’s interfaces to make them more user-friendly. Given the nature of the business, Vodafone’s management wants about 80% of the company’s internal transactions to take place on a mobile device. According to Niall O’Sullivan, Vodafone’s Global Finance Transformation Director, management believes mobile apps will be a major advantage in driving compliance, increasing ease of use, and reducing resistance to the actual processes themselves. The goal is to have the vast majority of user interactions with the system take place on a mobile phone. According to O’Sullivan, mobility provides easy access for employees who don’t typically engage with the SAP system, so more employees are using the system. The more people use the system, the greater the return on investment. Over 60,000 employees around the world now use the new system, with 80,000 expected by the end of 2014. Vodafone is now rolling out some of its enterprise applications for mobile devices, and so far, four have been selected. The first to go mobile was a travel and expense reporting application. Employees are able to take a photo of their receipts and get reimbursed without using any paper, and they can issue or approve requests for leave on their mobile phones all at one time. This application has reduced the time required to file travel expenses from 30 minutes to 10 minutes, with 7,500 expense claims filed each week, resulting in 300 person-days’ potential savings per week. Vodafone’s future mobile plans call for the development of a mobility portal and the integration of approval applications with finance, HR, and electronic sourcing. Vodafone’s business process transformation and ERP system have increased business efficiency and produced annual cost savings of $719 million. The total cost of ownership (TCO) of information technology has been lowered. Throughout the world, Vodafone has a consistent way of working and a more unified organizational structure. Getting the various operating companies to think and act more uniformly and to adopt a shared service model has produced benefits that are not immediately quantifiable, but should lead to further profitability in the long run.
Textbook: Laudon, K. C., & Laudon, J. P. (2016). Management information systems: Managing the digital firm (14th ed.). Upper Saddle River, NJ: Pearson.