Case 7 Complete

SAP for ATLAM BKAL3063
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Table of Contents

1.0 Introduction .............................................................................................................. 1
2.0 Problem Statement ................................................................................................... 2
3.0 Feasibility Analysis .................................................................................................. 4
4.0 Capital Budgeting Analysis ..................................................................................... 8
4.1 Initial Investment.................................................................................................. 9
4.2 After-tax Cash Flows for Years 1 through 6 ...................................................... 10
4.3 Payback Period ................................................................................................... 11
4.4 Net Present Value (NPV) ................................................................................... 12
4.5 Internal Rate of Return (IRR)............................................................................. 13
5.0 Gantt Chart ............................................................................................................. 15
6.0 Is Termination Lim is a Right Decision? ............................................................... 17
7.0 How to Overcome Staff Resistance ....................................................................... 18
8.0 Conclusion ............................................................................................................. 20


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1.0 Introduction
Akademi Teknikal Laut Malaysia (ATLAM) was established on 15 August 1981 as to
train and prepare Malaysians for the maritime industry which was located in Melaka
and Terengganu. ATLAM was wholly owned organization of MICT Berhad. Based
on the study conducted in 1997 by the World Maritime University, they found that
ATLAM had a poor IT infrastructure compared to Europe and Japan. This is because
ATLAM was relied on a customized single-user system which was solely for
accounting entries, and it is not functioned to generate financial reports.
The 1997 privatisation of ATLAM to become a subsidiary of PETRA Group
of Company has provided it with an access to better IT facilities. In year 2001, the
management had been asked to upgrade accounting system with the PETRA group-
wide SAP system. SAP was an integrated business application package that covered
most functions of an organization. This system included comprehensive functions of
financial accounting, controlling, asset management, sales and distribution, materials
management, human resources, plant maintenance, project system, BASIS system and
so forth.
Therefore, the Finance and Accounts Manager of ATLAM, Zulkifli Osman,
has been asked to review the plan of implementation the SAP in ATLAM and decide
whether they can upgrade their accounting system. He had to assess the risk
associated with the decision as the implementation of SAP system seems to be giving
big impact on the companys financial status.


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2.0 Problem Statement
Issue 1: SAP or ACCPA for ATLAM
One of the important issues we need to be discussed is making the right choice by
ATLAM between SAP and ACCPA to establish the campus-wide network. ATLAM
need to consider their fund, facilities and expertise in order to make good decision
making. The implementation of SAP will create many challenges, risks and higher
cost said by Zulkifli and Lim in the article.
Despite from that, there is lack of assets, such as Personal Computer for install
the SAP. Lastly, the key personnel of ATLAM involved in implementation phase do
not have expertise in using SAP. In order to success in implementation phase
expertise person need to assess on issue might occur during the phase. Those three
problems should be considered by project team before proceed with the project.
In order to evaluate the sufficiency of implementation of SAP system project,
we are advised that ATLAM could throughout feasibility study and capital budgeting
analysis to evaluate and analysis the valuable and feasibility of SAP system project in
organization.

Issue 2: Termination of Lim
In the case of SAP for ATLAM, Lim was having conflict on opinion with Zulkifli
when discussing the matter of SAP system in ATLAM. Lim was disagreed to
implement the SAP system in ATLAM because he know there is extreme factors will
faced such as low of fund, lack of expertise, and short of facilities. He relies on his
experience in ATLAM then suggests that need to use ACCPAC system rather than
SAP system.
These contribute to the conflict when Zulkifli was very unsatisfied with Lims
behaviour and intended to kick him out of the project team. Kamal advise him that the
critical ideas of Lim is good for organization since he was very experienced in such
related industry. He, advised Zulkifli to reconsider on the termination of Lim.


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Issues 3: Resistance to Change

This resistance to change issue refers to developing a new accounting system with the
PETRA group-wide SAP system. Zulkifli as Finance Manger concern that whether
ATLAMs employee would be ready to embrace the new system. We found that there
are several reasons the ATLAM is resistance to change at that time. Most reasons are
their lack of information about SAP system and also lack of knowledge about this
system. This is, creating the misunderstanding between Lim and Zulkifli. Lim
understanding is SAP system is only suitable for manufacturing industry and this
system was costly compared to ACCPAC.
In other hands, ATLAM is resistance to change because they are facing the
lack of resource to implement SAP system which are need a lots of funds,
equipments, spaces, and intelligence resources. The project team members
were complaint they are not enough Personal Computers in the departments to make
this practical to them. Then they do not even have the space available to house the
system, some of the employee in ATLAM have never used a Personal Computer
before and lack of the knowledge about information technology.
Furthermore, employees are also fear of loss power when change the system in
ATLAM operation. For information, ATLAM is a PETRA subsidiary and has to link
its system to PETRAs to match with their group reporting structure. Due to this
reason, ATLAMs employees are fear of loss of the power to control the system
operating and their old job also will be separately divided to each others. They are
worried that may change their role and responsibilities.


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3.0 Feasibility Analysis
First of all, we can found that most of the information system project has budgets
and deadlines. For ATLAM, it is not exception. Assessing project feasibility is
required for the implementing of new system. So, for implementing the new system
that is SAP is requires a system analyst, evaluate a wide range of factors. For
implementing on SAP, our group decides choose several feasibility factors that are
important toward the implementation.

3.1 Economic feasibility
Economic feasibility is required for baseline project plan. The purpose for assessing
economic feasibility is to identify financial benefits and costs associated with the
implementing SAP. Economic feasibility is often referred to as cost benefit analysis.
During project initiation and planning, it will be impossible to define precisely all
benefits and costs related to implementation. Yet, it is important that identify and
quantify benefits and costs, or it will be impossible for conduct a sound economic
analysis and determine whether SAP is more feasible than another. Next we review
worksheets that can use to record costs and benefits and techniques for making cost
benefit calculation. These worksheets are used for decide whether the SAP is valuable
for implementing.
Meanwhile, for determining the implementation benefits, we determine
whether the SAP can provide benefit for ATLAM. A new or renovated IS 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
access data quicker and good for decision making.
Beside, the implementation benefit has been dividing into tangible benefit and
intangible benefit. Tangible benefits are benefit which can be measured in dollar.
Tangible benefit can be seen for the implementing SAP is increase speed of activity
and reduction on error because there is a segmental reporting such divisional profit
and loss, variance analysis. For intangible benefit, it means that benefit cannot easily

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measured in dollar. The intangible benefit can get for ATLAM such improvement of
employee morale, broader societal implication, promote of ATLAM learning and
understanding and more timely information.
Other than determine the benefit, we also have to determine SAP cost. The
cost that include in the development of SAP such implementation of SAP that cost
RM5,000,000; new hardware that cost RM 1,000,000; training costs RM 1,272,550;
and customization work RM 72,840. Meanwhile, we can also dividing out the cost
into tangible cost and intangible cost. Tangible cost is hardware costs, labor cost, and
operational costs from employee training. Intangible cost is loss of customer
goodwill, employee morale and operational inefficiency.

3.2 Operational feasibility
Operational feasibility is a process of examining the likelihood that the project will
attain its desired objectives. The goal of this study is to understand the degree to
which the proposed system will likely solve the problem or take advantage for the
opportunities outlined in the system service request or project identification study. For
ATLAM, when SAP is implementing, it can fit the business model in ATLAM. As
ATLAM current is using system that cannot produce financial reports. Thus, when
ATLAM is implementing SAP, it can make the system be more efficient because SAP
allow complex segmental reporting.
But, Gopel has said that the implementing SAP system is about not only
change on technology, it also about a change in work processes, culture and habits.
The change is work processes and culture is hard because employee already familiar
with the work scope they do every day. In addition, it is about change mind in
employee for employee job roles that has been in their mind for few years. The
existing operations and support infrastructure of ATLAM cannot handle the SAP
system. It has show 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 affected staff in ATLAM to make the
implementation be operationally feasible.


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3.3 Technical feasibility
Technical feasibility understands the development organizations ability to construct
the proposed system. This analysis should include an assessment of the development
group understanding of possible target hardware software and operating environment
to be used, as well as system size, complexity, and group experience with similar
systems. As for ATLAM in implementation of SAP system, it is a must for identify
and evaluate whether SAP system will perform effectively, reliable and capability of
resources to utilize SAP system. In addition, the risk assessment to access technical
risk level of SAP system will be based on the following:
a) Project size
For implementing SAP system, it is said that it is a large project for ATLAM. As
Zulkifli who is Finance Manager also said that this is a unique and challenges on
implementing SAP system. As the large the project is, there will be a high risk on
the project. The project will have an impact for ATLAM when implementing it.
As the project is large and left limited time which is around 7 weeks for the
project team member to manage it, it will have high stress on it. The project team
member consists of five persons which is Sani as Project Manager, Gopal as User
Project Manager, Lim as User Representative, Kamal as Funtional Analyst and
Zulkifli as Finance Manager.
b) Project structure
For the requirement of SAP system project, it is highly structure and is well
define have a lower risk. When ATLAM is implementing SAP system, PETRA
group will provide applicable system to ATLAM. Even the user representative,
Lim whose is disagree and refuse for the implementation of SAP system, it still
need follow what have been decide because it is under control as ATLAM
management have highly commitment through the system.
c) Development group and User group
When ATLAM implement SAP system, it will have two group of people related
to its which is development group and user group. The project will have a high
risk on the development group meanwhile the user will have low familiar with

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the SAP system because never use it before. But, ATLAM can conduct training
for employee to reduce the risk of implement SAP system.

3.4 Schedule feasibility
Schedule feasibility is consider the likelihood that all potential time frames
and completion date schedule can be met and that meeting these date will be sufficient
for dealing with the needs of the organization. For ATLAM, there should access
schedule feasibility before implement SAP system. Schedule should with the duration
of SAP system before it is fully implement at ATLAM. The gantt chart should be use
on schedule the activity that need complete within 7 weeks. Other than Gantt Chart,
the user and support infrastructure should available for feasible project scheduling.
The most important for them to deal with is the resistance of staff to change.
Other than Gantt Chart, a time frame also needed for implement of SAP
system that involve in 7 week. The scheduling risk should also evaluate for the
possibility of happen of improper function of SAP system since the project is lack of
time. Since the cost is significant, ATLAM staff should be prepared well to accept
SAP system.

3.5 Political feasibility
Political feasibility is about understanding how key stakeholders within the
organization view the proposed system. This is due to an information system may
affect the distribution of information within the organization, and thus the distribution
of power, the construction of an IS can have political ramifications. Those
stakeholders not supporting the project may take steps to or block disrupt or change
the project intended focus. For ATLAM, the key stakeholder is their own staff. The
most important thing is to overcome the resistance change of ATLAM staffs. Because
staff is the parties whose will do their job with SAP system. If they refuse to change
will disrupt the project that implement.


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4.0 Capital Budgeting Analysis
Implementation of a new system is not a simple process. A company should have
proper planning before implementing a new system and consider whether it is a
desirable project that can bring benefits to the company. In this case, ATLAM plan to
upgrade its accounting system with the PETRA group-wide SAP system. So, ATLAM
has to plan and analyze to ensure that the implementation of SAP is feasible and can
bring maximum benefits to the company. To determine whether implementation of
SAP in ATLAM is a desirable project, we decide to perform a feasibility analysis in
capital budgeting.
Capital budgeting is the process of planning for purchases of long-term assets.
This technique focuses on cash flows rather than profits. This is means that it will
identify the cash inflows and cash outflows rather than revenues and expenses flowing
from the investment.
In order to determine whether ATLAM should implement SAP, we will do
some capital budgeting analysis which is including:
1. Initial Investment
2. After-tax Cash Flows for Years 1 through 6
3. Payback Period
4. Net Present Value (NPV)
5. Internal Rate of Return (IRR)
In this analysis, we assume:
Depreciation is 34% for six years based on reducing balance method.
Required internal rate of return is 25%.
Discount rate is 10%.
Marginal tax rate is 28%.


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4.1 Initial Investment
Initial investment is the cost incurred to enter a project. It is important to understand
how much it cost to start and run a project in order to determine the feasibility range.
Below show the calculation of the initial investment that would incur by ATLAM in
the implementation of SAP:

Initial Investment RM
Hardware

2,000,000.00
Initial software licence

1,000,000.00
Training costs

1,271,550.00
Customisation work

72,840.00
Total

4,344,390.00

The initial investment that need 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.


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4.2 After-tax Cash Flows for Years 1 through 6

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Savings: RM RM RM RM RM RM
Accountant's time and efficiency - 400,000.00 800,000.00 1,200,000.00 1,600,000.00 2,000,000.00
Technical expertise cost savings 600,000.00 1,200,000.00 1,400,000.00 1,600,000.00 1,800,000.00 2,000,000.00
Process and procedures cost savings - 500,000.00 900,000.00 1,200,000.00 1,500,000.00 1,800,000.00
Working capital savings 900,000.00 1,200,000.00 1,500,000.00 1,500,000.00 1,500,000.00 1,500,000.00
Total Savings 1,500,000.00 3,300,000.00 4,600,000.00 5,500,000.00 6,400,000.00 7,300,000.00

Costs:
Average SAP licence cost - 150,000.00 200,000.00 225,000.00 250,000.00 250,000.00
Cost to convert old data to new data 100,000.00 160,000.00 180,000.00 560,000.00 600,000.00 640,000.00
Cost of overheads 300,000.00 420,000.00 490,000.00 560,000.00 600,000.00 640,000.00
Cost of system maintenance and firewalls 60,000.00 120,000.00 130,000.00 140,000.00 150,000.00 160,000.00
Cost of hardware expansion - 260,000.00 300,000.00 340,000.00 380,000.00 400,000.00
Cost of training 500,000.00 800,000.00 900,000.00 1,000,000.00 1,100,000.00 1,300,000.00
Total Costs 960,000.00 1,910,000.00 2,200,000.00 2,825,000.00 3,080,000.00 3,390,000.00

Earnings before tax and depreciation 540,000.00 1,390,000.00 2,400,000.00 2,675,000.00 3,320,000.00 3,910,000.00
Depreciation cost (34%) 1,477,092.60 974,881.12 643,421.54 424,658.21 280,274.42 184,981.12
Net book value after depreciation 2,867,297.40 1,892,416.28 1,248,994.75 824,336.53 544,062.11 359,080.99

Earnings before tax (937,092.60) 415,118.88 1,756,578.46 2,250,341.79 3,039,725.58 3,725,018.88
Tax rate (28%) (262,385.93) 116,233.29 491,841.97 630,095.70 851,123.16 1,043,005.29
Earnings after tax (674,706.67) 298,885.60 1,264,736.49 1,620,246.09 2,188,602.42 2,682,013.59
Depreciation reversal 1,477,092.60 974,881.12 643,421.54 424,658.21 280,274.42 184,981.12
After-tax cash flows 802,385.93 1,273,766.71 1,908,158.03 2,044,904.30 2,468,876.84 2,866,994.71

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The after-tax cash flows for the implementation of SAP is RM 802,385.93 in year 1,
RM 1,273,766.71 in year 2, RM 1,908,158.03 in year 3, RM 2,044,904.30 in year 4,
RM 2,468,876.84 in year 5 and RM 2,866,994.71 in year 6.

4.3 Payback Period
Payback period is a method that estimates the amount of time required for the cash
flows generated by the investment to repay the cost of the investment. This analysis
provides insight into the liquidity of the investment. An investment with shorter
payback period is preferred.
Year Cash Flow Cumulative Cash Flow
RM RM
0 (4,344,390.00) (4,344,390.00)
1 802,385.93 (3,542,004.07)
2 1,273,766.71 (2,268,237.36)
3 1,908,158.03 (360,079.33)
4 2,044,904.30 1,684,824.97
5 2,468,876.84 4,153,701.81
6 2,866,994.71 7,020,696.52

Recall the initial outlay is RM 4,344,390.00. Up to year 3, the accumulated
cash flow is RM 3,984,310.67. Hence, it is requires RM 360,079.33 which is show at
the calculation above to cover the initial investment.
To determine the remaining period:

Therefore, the payback period for the implementation of SAP is 3.18 years.
This means that ATLAM will be able to recover the cost of initial investment for SAP
in 3 years and 3 months which the cash flows generated by SAP equal to its initial
investment, RM 4,344,390. This also shows that ATLAM can move into profit and do
not need to bear the cost of implementing SAP after 3 years and 3 months.

Payback Period = 3 + (Balance left in year 3 / Cash flow in year 4)
= 3 + (360,079.33 / 2,044,904.30)
= 3 + 0.18
= 3.18 years or 3 years and 3 months


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4.4 Net Present Value (NPV)
NPV gives a truer picture of the profitability of a potential investment by explicitly
taking into consideration the size and timing of all cash flows associated with the
proposed investment. It involves discounting a stream of future cash flows back to its
present value. According to (A.Ross, D.Jordan, & Mazlan, 2007), an investment
should be accepted if the value of net present value is positive and rejected if it is
negative.
Year Cash Flow PVIF Present Value
RM 10% RM
1 802,385.93 0.9091 729,449.05
2 1,273,766.71 0.8264 1,052,640.81
3 1,908,158.03 0.7513 1,433,599.13
4 2,044,904.30 0.6830 1,396,669.64
5 2,468,876.84 0.6209 1,532,925.63
6 2,866,994.71 0.5645 1,618,418.52
Total Present Value 7,763,702.77

Net present value (NPV) = RM 7,763,702.77 RM 4,344,390.00
= RM 3,419,312.77

The present value is RM 7,763,702.77 and the initial outlay is only RM
4,344,390.00, hence the net present value is RM 3,419,312.77. Based on the
calculation above, the value of NPV is positive. This illustrate that SAP is desirable to
implement in the company.


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4.5 Internal Rate of Return (IRR)
Internal Rate of Return is the rate of return from the capital investment. In other words, IRR is the discount rate that makes NPV equal to zero.
With the NPV analysis, the IRR can be compared to a required rate of return to determine whether the company should accept the investment.
An investment with IRR that greater than required rate of return may be accepted while it may be rejected if IRR less than required rate of return.
By using trial and error method:
25% 27% (Rate 1) 29% (Rate 2)
Year Cash Flow PVIF Present Value PVIF Present Value PVIF Present Value
RM RM RM RM
0

(4,344,390.00) 1.0000 (4,344,390.00) 1.0000 (4,344,390.00) 1.0000

(4,344,390.00)
1

802,385.93 0.8000 641,908.74 0.7874 631,799.94 0.7752

622,004.60
2

1,273,766.71 0.6400 815,210.70 0.6200 789,736.94 0.6009

765,438.80
3

1,908,158.03 0.5120 976,976.91 0.4882 931,543.58 0.4658

888,884.24
4

2,044,904.30 0.4096 837,592.80 0.3844 786,064.36 0.3611

738,438.19
5

2,468,876.84 0.3277 809,001.56 0.3027 747,275.63 0.2799

691,115.88
6

2,866,994.71 0.2621 751,565.46 0.2383 683,289.22 0.2170

622,140.72
487,866.18 225,319.67

(16,367.56)

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Based on the calculation above, the investment in SAP is feasible because the internal rate of
return is 28.86% which is greater than the required rate of return of 25%. Thus, this project is
acceptable.

Interpolation:

=

= 0.9323
27 IRR = -1.8646
IRR = 27 + 1.8646
IRR = 28.86%


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5.0 Gantt Chart
A gantt chart is a horizontal bar chart developed as a production control tool in 1917 by Henry L.
Gantt, an American engineer and social scientist. Frequently used in project management, a
Gantt chart provides a graphical illustration of a schedule that helps to plan, coordinate, and track
specific tasks in a project. Gantt charts may be simple versions created on graph paper or more
complex automated versions created using project management applications such as Microsoft
Project or Excel.
From this case, we are using excel as a tool to create ATLAM gantt chart. The reason we
choose this tool since by using excel it is more affordable rather than use a software like smart
sheet which will be costly toward company.
AKADEMI TEKNIKAL LAUT MALAYSIA (ATLAM)
GANTT CHART
SAP SYSTEM IMPLEMENTATION

Task Start Date Duration(days) End Date
Develop SAP workplan and budget 22/01 5 26-Jan-02
Forming SAP development team and executive 24/01 3 26-Jan-02
Perform Feasibility study of SAP and capital
budgeting analysis
26/01 6 31-Jan-02
Configuration of new SAP system 31/01 15 15-Feb-02
Pilot Testing 15/02 5 20-Feb-02
Training employee 20/02 5 25-Feb-02
Implement within organization 25/02 30 26-Mac-02
Prepare Analysis Report 26/03 7 01-Apr-02

22/01 05/02 19/02 05/03 19/03 02/04 16/04
Develop SAP workplan and budget
Form SAP development team and executive
Perform Feasibility study of SAP and capital
Configuration of new SAP system
Pilot Testing
Training employee
Implement within organization
Prepare Analysis Report

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Based on the above table, we already show steps that involve in ensuring the successful
implementation of SAP. The Gantt chart above constructed with a horizontal axis representing
the total time span (days) of the SAP implementation project in each task and a vertical axis
representing the tasks that make up the SAP implementation project. There is 8 step involve in
this project which is first is they have to develop work plan and budget. This task take about 1-5
days to finish and next is follow by forming SAP development team and executive which will
handle this project and person to refer to. This takes about only 1-3 days and then they must
perform feasibility study of SAP and capital budgeting analysis to get understanding regarding
SAP which takes 1-6 days.
After that they have to make a configuration of new SAP system to ensure that the system
able to give best benefit and suitable with the current operation in the organization. It takes 1-15
days to finish it. Next, the most important task that needs to be done is pilot testing to ensure that
this system can be run and able to increase top management trust toward the decision. It only
takes 5 days and same with training employee task. This task is needed, so all of these people
will have required SAP knowledge and skills or even SAP certifications.
Then, the system that already complete will be implement stages by stages within
organization which takes the longest period which is 1-30 days. This is to ensure that the system
can be implementing successfully. Last step is preparing an Analysis Report to give feedback
regarding new system toward top management which only takes 1-7 days. The time frame is
from 22 January 2002 and must be finished before 1 April 2002.

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6.0 Is Termination Lim is a Right Decision?
Zulkifli Osman is the Financial Manager in ATLAM since 1995 while Lim is User
Representative in the discussion about the new system upgrade. When having the meeting for
discuss the implement SAP as ATLAM new accounting system, Zulkifli and Lim have different
opinion. Zulkifli believed the implementation of SAP is better than ACCPAC but Lim strongly
disagree with this opinion.
Lim thinks the SAP got a lot of weaknesses while the ACCPAC can bring benefits to the
company. Lim argues the implement of SAP costs the company a lot (include the
implementation costs and accompanying operational costs). Company are unable to afford the
costs due to the deficit in year 2001. Besides that, Lim also argues that the SAP is suitable for
manufacturing industry but not education industry. Additional, lack of resources (PCs) in
department and staff there are lack of PCs knowledge and skills also make the SAP impractical
in ATLAM. However, Zulkifli strength with his opinion and conclude the SAP will be
implement in the company because even SAP involved unique risks and challenges, it also bring
benefits to the company.
In the case SAP for ATLAM, Zulkifli was terminate Lim from the project team because
Zulkifli thinks Lim is a time waster and the time waster cannot be in the project team. Other than
that, Zulkifli terminate Lim because Lim raised too many issues when having the meeting and
Lim was bring too many questions that justify the reliability of the SAP system. Zulkifli was
afraid that Lim would influence the others with his views.
Zulkifli terminate Lim is a wrong decision because Lim was contributed a lot when
having the discussion. Lim is very experienced and he brought the issues that are important and
should be take into consideration. Zulkifi cannot simply terminate Lim because Lim has some
specify knowledge that other people dont have. If Zulkifli terminate Lim because Lim disagree
with his opinion, the staff wouldnt contribute their opinion in the other meeting because they
will scary the thing happen in Lim will happen for them also. Zulkifli become autocratic, so even
decision by Zulkifli was wrong, no people will speak out. This will give the serious effect to the
company.

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7.0 How to Overcome Staff Resistance
To ensure that SAP system can be implementing in ATLAM, Zulkifli need to confident all the
staffs that SAP system will help them in the term of business process and all transaction will be
more effective and efficient. This is because when a company wants to implement changes in
business process and job duties, the most resistance that need to overcome is from the staffs or
the users of SAP system. There are a few ways on how to overcome the staff resistance.
i. Communicate Early
Before implementing the SAP system, Zulkifli first and foremost need to communicate
with the ATLAMs staffs. This is because human is the element has to be a key part of
the SAP system project planning. Managers have a tendency to underestimate how
upsetting this type of change can be. Zulkifli should begin preparing the staffs for a major
change months before, not when its occurring.
ii. Communicate Often
Change is difficult for people to accept especially when it involves areas of expertise and
prerogative. Thats why Zulkifli and the other steering committee need to make sure they
are being as open as possible and communicating consistently about whats happening.
Newsletters, town hall meetings and email updates are just a few of the tactics they can
use to make sure ATLAMs staffs are well informed, and the rumor mill isnt taking
over. Other than that, Zulkifli also need to seek their feedbacks.
iii. Explain Whats in the SAP System For Them
It is important to explain why SAP system need to be implemented and discuss how it
will affect ATLAMs staffs. Focus on how the changes will improve the companys
performance and help ATLAMs staffs perform their work. At the same time, Zulkifli
shouldnt shy away from talking about the bad and the ugly. If it will make things more
difficult for individual ATLAMs staffs, consider offering incentives or additional
support.

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iv. Ensure Management Buy-In
A successful technology implementation starts with the whole-hearted commitment of the
steering committee. Therefore, Zulkifli need to have the motives for implementing the
SAP system. Then rally the support of your managers and the steering committee. This is
because, during the implementation, there will be lots of room for interdepartmental
discord. Therefore, Zulkifli need to make sure that everyone is all pulling in the same
direction and delivering the same message.
v. Provide Adequate Training
Not all ATLAMs staffs are savvy about technology. Therefore, to implement SAP
system into ATLAM, it needs to have effective communications and high quality
training. Training is a must for ensuring that ATLAMs staffs cope well with the changes
and make a smooth transition to the new order.
vi. Get Them Involved
Every system such as SAP has many users that will use the system. One of the ways to
overcome the resistance in ATLAM is by involved the key users in the steering
committee. Ask for their opinions on the system requirement and then involve them in
system demonstrations. Not only will you be benefitting from their expertise, but you will
be bringing them on the side. They can even be your champions, helping fellow
ATLAMs staffs become comfortable with the new technology.
vii. Block the Exits
Once the project director of SAP system had communicated with the ATLAMs staffs,
sought their feedback, its time to proceed. This means that any requirement requests
from the users will be vetoed. It is necessary to achieve a successful implementation of
SAP system into ATLAM. Other than that, if there to be any changes during the
implementation it will increase the duration of time and increase the cost.


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8.0 Conclusion
After we do for the analysis and evaluate the usefulness of SAP system project, we recommend
that ATLAM should implement the SAP system as soon as possible. The implementation of
SAP system would bring a lot of benefit for ALAM in the long term view.
From the discussion, we can conclude that SAP should be implemented in ATLAM due
to several perspectives. First of all, the calculations of after-tax cash flow are positive in these 6
years show that this system will generate more cash than the cost of its initial investment.
Besides that, the net present value shows a positive value and the implementation of SAP
systems requires 3 years and 3 months only recovering the initial investment which is acceptable
due to the useful life is 6 years. In addition, the internal rate of return is 28.86% which is greater
than the required rate of return of 25% shows that the company should accept this project.
Hence, we can conclude that it is feasible to carry on the implementation of SAP system in
ATLAM as the benefits of implementing the system exceed its cost.
In the case of SAP for ATLAM, issue Lim was having conflict with Zulkifli in the SAP
implementation matter. In our group opinion, when a team has difference of opinion to resolve
this conflict requires a lot of respect and patience from both side. We hereby recommend that
Zulkifli must make the best decision to maintain the expertise in their organization.
Zulkifli need to resolve the conflict in good manner. He needs to prepare for the solution
first by acknowledge the conflict and find ways to communicate and discuss with Lim properly.
Then Zulkifli need understanding the situation by clarify Lim positions, and also need to make
assumption if they in Lim side.
Last but not least is in preventing conflict, the teams can be used such skill and behaviour
that very work on, such as dealing with conflict immediately, being open, practicing clear
communication, practicing active listening, not letting conflict get personal, encouraging
different points of view, not looking for blame, demonstrating respect, as well as keeping team
issues within the team.

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Lastly, Lim is expertise person in organization and as a good asset to ATLAM, we are not
suggesting Zulkifli to kick Lim out from the project team.

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