1.0 INTRODUCTION Akademi Teknikal Laut Malaysia (ATLAM) was established on 15 August 1981, which wholly owned and organization by MICT Berhad located in Melaka and Terengganu. ATLAM was focused on training and preparing Malaysia for the maritime industry. On 1 January 1997 ATLAM went privatized and became one of the subsidiaries of the PETRA group-wide SAP. ATLAM vision and mission was to be a leader in maritime education and training and to facilitate value added learning via a conductive environment and provide excellent services to its clients. According to the conductive study by World Maritime University in 1997 ATLAM IT infrastructure was poor if compared to other countries in Europe ...view middle of the document...
So ATLAM have to look for alternatives to upgrade its accounting system. Among the alternatives that they had on upgrading their system, which was the ACCPAC and the SAP system ATLAM choose
SAP system in order to match the reports with PETRA. Therefore this decision leads to too many risks and problems.
3.0 THE PROBLEMS 3.1 DEPRECIATION COST: In this case, depreciation cost is one of the costs that we should encounter. In the information given, the depreciation rate is 34% for 6 years. We will be doing some capital budgeting analysis whereby calculating depreciation cost is included. In this case, we will be using the straight line depreciation method. Straight line depreciation method is the most popular and simplest method whereby most firms used this method in daily practice. This is because in early years of an assets life, it results in lower depreciation expense and hence higher reported net income rather than reducing balance method. The calculation will be like this. Initial cost for this system is RM 5,344,390 . Depreciation is 34%/6 years = 5.66% per year Straight line method is cost x %Depreciation per year Hence, RM 5,344,390 x 5.66% =RM320,848.77.
3.2 SAP EXECUTIVE DEPARTMENT: ATLAM will need to hire the executive staff to guide their staff on using the new system, so it is the extra cost.
3.3 LICENSE FEES: To install a new system, license fees is a must for users to pay it. The license fees are paid annually. This license is based on a one user per task formula. Therefore, each user will be given an ID. The ID chosen can't be same for all users due the prevention of privacy and confidential information. Besides, it is also for safety and security reason. The system assign one ID per user for any single task as the reason for all internal control and audit purposes in future. As stated before, the initial investment cost itself for this system is amounted RM5,344,390. It shows a big amount to the organization itself .This cost already covers almost 75% of the previous capital expenditure in 2001.
3.4 MAINTENANCE COST: When implementing a new system so called this SAP system, maintenance cost is one of the ongoing cost to be added to. This system needs maintenance from time to time. Thus, cost of this maintenance might vary accordingly. There might be changes from time to time towards this system which will increase the duration of time and also increase the cost too.
3.5 COST OF TRAINING STAFFS: Some staffs do not know how to use the PCs, therefore the need to of training them how to use the PCs and how to use the system which will cost time and money.
3.6 LACK OF RESOURCES: One of the obstacles faced by ATLAM is insufficient resources in terms of fund, facilities and expertise. The finance manager, Zulkifli, knows that there were risks and challenges involved in implementing SAP. The project team members were complaining on
insufficient of personal computers in the department to make the system more...