ISSUE 1 : Feasibility Analysis on SAP
Several feasibility factors that are important for the implementation of SAP were analyzed.
A. Economic feasibility
Economic feasibility is analyzed by identifying the financial benefits and costs associated with the implementing SAP. It is also commonly referred as cost benefit analysis. A new or renovated information system 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 ...view middle of the document...
The existing operations and support infrastructure of ATLAM cannot handle the SAP system which shows 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 influence the employees in ATLAM in order for the implementation be operationally feasible
C. Technical feasibility
The risk assessment to access technical risk level of SAP system is evaluated based on several factors. Firstly, implementation of SAP is considered a large project for ATLAM as according to Zulkifli , it is unique and poses several challenges and risks on implementing SAP system. Since the project size is large and constrained by limited time which is only around 7 weeks to manage it. Secondly, the SAP system involves a highly structure and have lower risk. When ATLAM is implementing SAP system, PETRA group will provide applicable system to ATLAM since decide it is under control of PETRA as ATLAM management have highly commitment through the system. Thirdly, if ATLAM implements SAP system, it will have two group of people related to it which is development group and user group. The project will have a high risk on the development group meanwhile the user will have low familiarity. However, the employees can be trained and educated to operate the system, thereby reducing the risk of implementation of the SAP system.
Initial investment is the initial cost incurred to before the project. Below show the calculation of the initial investment that would incur by ATLAM in the implementation of SAP
INITIAL INVESTMENT RM
Initial software license 1,000,000.00
Training costs 1,271,550.00
Customization work 72,840.00
Hence, the initial investment as per computation that is needed 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.
Cash Inflow in RMSavings | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 |
Accountant's time and efficiency | | 400,000 | 800,000 | 1,200,000 | 1,600,000 | 2,000,000 |
Technical expertise cost savings | 600,000 | 1,200,000 | 1,400,000 | 1,600,000 | 1,800,000 | 2,000,000 |
Process and procedures cost savings | | 500,000 | 900,000 | 1,200,000 | 1,500,000 | 1,800,000 |
Working capital savings | 900,000 | 1,200,000 | 1,500,000 | 1,500,000 | 1,500,000 | 1,500,000 |
Total savings |...