Introduction
ERP is a
system that functions toward the creation of an integrated product that
monitors and controls the majority of functions within an organization. Scott
(2002) defined an enterprise resource planning (ERP) system as “a suite of
integrated corporate-wide software applications that drives manufacturing,
financial, distribution, HR, and other business functions in a real-time
environment”. Before introduction of
ERP, companies’ mode of operations was incorporating different applications to
automate various operations. The system is increasingly salient in the modern
organization because of its ability to enable integration of the flow of
material, finance and information and also provision of formidable ground for
organizational strategies. Thus, Integration is the most important aspect of
the ERP system.
The report's
premise is to conduct the feasibility assessment of the three ERP systems: 'SAP
on-premises system', Noria on-premises system' and 'Noria cloud (SaaS) system'.
The selection is in alignment with the Diet centre case study to select the
most suitable ERP system. The feasibility assessment is based on three
assessments: technical feasibility, economic feasibility and organizational
feasibility. The selected ERP system is SAP on-premise system.
Problem
statement
Diet Centre
through its CEO, Wazzan, is convinced they need to consolidate its operations
through the integration of the ERP system in their operation. Since, the Diet
centre is based in Lebanon, a country that has faced an unstable political
situation as well as poor economic conditions; they are uncertainties
surrounding the implementation of such a large investment system. Therefore,
the feasibility assessment of SAP on-premises system', Noria on-premises
system' and 'Noria cloud (SaaS) system' should help in selecting an ERP system
to provide substantive benefits. In a nutshell, the system should be reliable
and cost-effective.
Technical
feasibility
The
technical aspect involves the extent to which the system can be designed,
developed and installed by the experts successfully (Fincham, 2002). One of the
major aspects of technical feasibility is whether the software host is in the
cloud or on-premises.
Familiarity with application
Diet centre
analysts are unfamiliar with these three applications. These applications have never been integrated
into the company, therefore is a greater risk of missing the opportunities
prerequisite to solving the problem facing Diet Centre. Therefore, these systems are riskier
considering there is no extension of the existing systems in the company.
Familiarity
with technology
Since these ERP systems are new within the
Diet centre organization context there is a high chance of occurring problems
and risks. The technology has never been used before, therefore, there is a
need for more time for the analysts to learn and improve their skills in the
utilization of the system. Furthermore, the risk of SAP on-premises system' and
Noria on-premises system' is less compared to Noria cloud system. It is
associated with the fact that cloud-system technology is new therefore; the
chances of experiencing problems are high.
Project
size
Compared to
both Noria on-premises system' and 'Noria cloud (SaaS) system', the 'SAP
on-premises system', is a large project. It is because the project involves
many heavy users. The system requires 50 workstations and 40 laptops as part of
the initial hardware architecture. Furthermore, SAP on-premise implementation
is expected to take up to 18 months. The duration will entail set-up, testing
and training for seamless implementation. Therefore, since SAP on-premises, is
a large project, it presents more risk considering they are complicated to
manage and thus some of the system requirements may be overlooked.
In
comparison between the on-premise and cloud system is that, on-premises system
requires longer implementation time compared to cloud systems, thus they will
tend to be more risky.
Compatibility
The case
study indicates that all the ERP systems are compatible with the already
existing systems. The existing ABC system was unable to integrate data from
Diet Centre's four main departments. Therefore, the introduction of the new
system is all compatible since they all can utilize the existing communication
infrastructure. However, on-premises systems are highly customizability and
offer greater control over data (Nakkeeran et al., 2021). In other words, the
company’s internal IT staffs maintains the software as well handling its
upgrades. In some of the cases, the comapny can outsource support of the comany
to an outside IT service although the software is installed in their hardware
(Arnesen, Spencer, 2019). In the narrow
sense, business can integrate its data from its departments perfectly.
Organizational feasibility
It entails
the acceptability of the system by the users and its inclusion into the
existing operations of the organization. Organizational feasibility is
influenced by alignment with the business objective and the stakeholder
analysis.
The
incorporation of SAP on-premises in the operation of the Diet centre
organization seems to be aligned with its business objective. With the company,
the rapid growing operation is ideal for the company to integrate a large
system into its operation to help the company avoid incurring high operation
costs, excessive waste and unsatisfactory financial reporting. However, though
the system seems the perfect fit for Diet Center it is too costly. On the other
side, Noria cloud system and Noria on-premises are at a much lower cost.
Furthermore, the systems are considered reliable and cost-effective in the
Middle East Asia market with many users approving it. However, since Wazzan,
CEO of Diet centre intention is to work with her close relative Jabri. Thus, the
selection of the SAP on-premise is considered a business objective, since Jabri
(SAP's sales manager) has recommended the migration to the SAP system.
Another key
aspect of organizational feasibility is stakeholder analysis. Arguably the introduction of the new system
changes the dynamics of the system. Fundamentally, the roles of the stakeholder
groups are bound to change depending on the type of the system. In this view,
the selection of the on-premise system will have a slight change in the roles
of the IT personnel. For instance, the
outsourcing of the IT services to maintain installed software will render some
of the IT personnel jobless and therefore most likely to receive resistance. On
the other hand, an on-premises system maintained by the company's personnel
will have slight changes in the role of the experts.
Cloud system
SaaS provide application and services on demand. Under this infrastructure, the
IT infrastructure is established by a third party and made available to the
customers (Scavo et al. 2012). Therefore, the role of the IT personnel is bound
to change significantly. With only
manpower required to implement the system in the organization, the
implementation of the system is bound to face enormous resistance.
Economic
feasibility
The aspect
premise is on the identification of the costs and benefits associated with the
selected ERP systems, assigning value to them and determining their financial
viability. With the projected cash flow both inflows and outflows, SAP
on-premises system', Noria on-premises system' and 'Noria cloud (SaaS) system'
have a return on investment of 10%, 8.9% and 11% respectively. A higher return
on investment means that the project benefits outweigh the project cost. With a
higher return on investment, the SAP on-premises system appears to be the best
system among the three ERP systems. On the break time, SAP on-premises system',
Noria on-premises system' and 'Noria cloud (SaaS) system' is projected to be
2.6 years, 2.7 years and 2.5 years. Since the Noria cloud (SaaS) system’ is
indicated to produce higher returns in the earliest, then the assumption is
that the system is less risky compared to the rest. Therefore, the SAp on-premise system though
seems a large project is less risky compared to Noria on-premise system.
Selection
of cloud system
Based on the
above feasibility analysis, it is clear that the Noria cloud system is the best
suitable for Diet centre organization. Based on the technical feasibility, of
SAP on-premises, though it is riskier since it takes a long, it will integrate
all data from Diet Centre's four departments for centralized operations.
According to Rima et al., (2011) cloud solutions spare users the expense of
acquiring new hardware, implementation and maintenance. In other words scaling
becomes cheaper. The selection is based on the fact that the Diet centre
requires a full range of features in conjunction with highly flexible
customization. Therefore, it is suitable for the organization since it has
well-proven business processes. under
this review, the cloud system architecture is already implemented and downtime
is fundamentally non-existence for cloud-system.
On the
organizational feasibility, SAP on-premises are aligned with the objective and
the requirement of the business. It is a
large system that will revolutionize the operation of the business to provide
efficient handling of costs and waste. On contrast, the cloud system is not
implemented by the comapny therefore some of the features may not be aligned
with its objectives.
On the economic feasibility, it is clearly the
cloud system has a better economic feasibility over the on-premise system. It
has the highest return value of 11% and the least on break value of 2.5 years.
Therefore,
in choosing a new EPR system, the cloud system has made software more
accessible to companies and these
systems have few drawbacks compared to on-premise, such as on-premise on
supporting mobile (Link et al., 2015).
Conclusion
Feasibility
assessment is an important process in the selection of a suitable ERP system
for the organization. Every organization depending on its attributes requires a
different system. Therefore, the criteria employed not only indicate why the
system is the best fit but avail of its shortcomings and probably suggestions
on how to mitigate them. Diet centre to become reliable and cost-effective in
its operations, it will have to implicate this system and concurrently still
use the previous system since it will require more time. Therefore, the incoporation of cloud system
model provide solutions to current problems and also deal with market models.
References
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Nakkeeran,
A., Niranga, M., & Wickramarachchi, R. (2021). A Model for On-Premises ERP
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