Case Study 3 Homework The Schedule Change That Brought Phase Forward

Case Study III-6 BAT Taiwan: Implementing SAP for a Strategic Transition

Teaching Note on Case Study III-6

BAT Taiwan: Implementing SAP for a Strategic

Transition

Objectives

multinational corporations can implement an enterprise system standard in a small country office

by leveraging IS resources and expertise housed in a regional center (here the Asia Pacific Shared

This case study therefore also gives students a better understanding of what it takes for a small

business to implement a complex enterprise system package, such as SAP R/3. The company

here is a global firm with end markets across the globe that sell tobacco products; given the recent

research on health problems associated with the usage of tobacco, the growth markets for the firm

[Note: The Shared Services unit in the Asia Pacific region that BAT Taiwan utilized is described

in a separate case study in this textbook. See Case Study IV-9: BAT-APSS: Shared Services at a

Multinational Firm.]

From consideration of this case study, students will:

Learn how an ERP system standard can be implemented in multinational corporations with

Overview

The functionality and potential benefits of enterprise resource planning systems (ERPs) are

Case Study III-6 BAT Taiwan: Implementing SAP for a Strategic Transition

are particularly challenging because of the complexity of the packages and the typical goal of

achieving a certain level of standardization across all divisions.

An ERP system such as SAP R/3 is extremely flexible and can be configured to support virtually

any business strategy and company structure. However, changes once the system is implemented

are not easy to achieve. Two extreme approaches for initially implementing an ERP system in a

global corporation are as follows:

A global ERP configuration with a single instance in a single production client. If the

operations of the corporation are sufficiently interrelated so that many of the decisions can be

made centrally (such as purchase of raw materials), or with data that are shared (such as the

Company Background and Structure

BAT is a large publicly-held company that manufactures and/or distributes cigarettes in

approximately 120 countries. With annual revenues of approximately $34 billion in 2000, it is,

today, having grown by merger and acquisition, the second largest company in the tobacco

Background on the BAT IT Function

IT function has focused on common platforms, standards, and integrated solutions, with the aim

of reducing service delivery costs. One aspect has been to focus on global strategies to help

reduce the costs of implementing integrated IT solutions and ongoing IT service delivery.

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in Hong Kong.

BAT Taiwan (BATT) Background

Prior to January 2001, BAT Taiwan was a branch office of BAT U.K. responsible for marketing

arket)

trading status (and therefore its overall business model). First, when BAT merged with Rothmans

ems needs prior to the change in overall business model were provided by BAT U.K

(United Kingdom), which uses R/3. Hence Taiwan personnel were somewhat familiar with the

system that they would be using as of January 1, 2001. However, because of the limited trading

SAP R/3 Implementation Project at BATT

[Note: The key characteristics described below are based on Brown and Vessey (2003); see full

reference below.]

Organizational Characteristics

ERP Package Capabilities, Choice, and Scope

BATT wanted to use R/3 to support its new operations, so long as the system could be

implemented and supported at a cost commensurate with its small market size. Preliminary

investigations revealed the feasibility of significantly lower costs by seeking R/3 services internal

to BAT for both deployment and operations and ma

The system was to be implemented in two phases. Phase 1, which was to run from September 25,

2000, to January 2, 2001, would permit BATT to import product, while Phase 2, with an

ERP Project Critical Success Factors

1) Top management is engaged in the project, not just involved.

Mah Yong Tian was the business sponsor for the project. He initiated the study by Bain

2) Project leaders are veterans, and team members are decision makers.

The project was essentially managed by three people, one from each of the units with vested

interests in the success of the project, each of whom had distinct responsibilities. C. Y. Lee,

Case Study III-6 BAT Taiwan: Implementing SAP for a Strategic Transition

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Two functional sub-teams were formed from APSS personnel and BATT power users as follows:

1) sales and distribution and materials management (2 APSS, 1 BATT); and 2) financials and

controlling (2 APSS and 5 BATT). Business process owners were also designated as formal

participants. However, the major business process owner role was played by H. Y. Lim, who

initially was the designated process owner for logistics and then assumed that role also for

3) Third parties fill gaps in expertise and transfer their knowledge.

– implementation (see

4) Change management goes hand-in-hand with project planning.

Change management involves anticipating the effects that the new application will have on

individuals, communicating with personnel regarding the upcoming changes, defining new roles,

and providing training for those involved in using the new system. Change management

5) A satisficing mindset prevails.

Complexity in the BATT project was reduced by using an existing template, the Symphony

means that the business processes are largely determined by the template, although the system

still needs to be tailored by company code (i.e., country or end market) to reflect the specific

Case Study III-6 BAT Taiwan: Implementing SAP for a Strategic Transition

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Adding to the complexity of the initial implementation was the schedule change that brought

forward Phase 2, due to be completed in June 30, 2001, to the same completion date as Phase 1

(January 2, 2001). This change proved troublesome for two major reasons. First, it stretched the

power users who were already performing their daily functions at the same time as working on

the project team. In response to concerns regarding system quality and adequacy of the resources

Epilogue

Although the technical system functioned extremely well in the three months following Go Live,

procedural errors due to lack of process knowledge on the part of the BATT users did cause some

initial problems. APSS has also developed a six-tier support plan as part of its help desk

capability to support the users of systems for which it is responsible. Each tier is assigned a

priority ranking and minimum service levels are specified. Knowledge regarding the Taiwan

Selected References

ches: Towards a contingency

ICIS Conference Proceedings, 1999.

MIS Quarterly Executive, 2:1 (March 2003).

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Questions for Discussion

1. Why did BATT believe that implementing SAP R/3 was the best enterprise system

software package for this unit to implement?

[Note: The discussion could begin with a general discussion of the potential benefits from an ERP

syste

smaller Sage Tetra CS3.]

2. Discuss the pros and cons for BATT to use APSS personnel rather than a well-known

consultant firm for an implementation partner?

The APSS personnel were less experienced than the typical Andersen Consulting (now

3. What are some of the potential advantages associated with the usage of a BAT template

for BAT Taiwan?

4. Using the five factors associated with the success of an ERP project (in Chapter 11),

evaluate how well this initial implementation project was conducted.

This was a risky project because of the dependence on IS resources external to the BAT Taiwan

office, as well as the need to train personnel new to BATT on processes new to BATT at the same

time that the system is being implemented. However, the project met the criteria for success

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