An analysis of Telkom's SAP R/3 adaptation strategy.

Abstract

This study set out to ascertain whether or not Telkom's SAP Rl3! process modification adaptation strategy resulted in improved supply chain performance. For Telkom who have struggled, at great expense and with great frustration, with incompatible information systems and inconsistent operating practices, the promise of an off-the-shelf solution, in the form of SAP R3, to solve its problem of supply chain integration was too great to resist. There are two alternative approaches to implementation of packaged software: Package adaptation to organisational needs and organisational adaptation to the package. This research revealed that typically, Enterprise Resource Planning (ERP) vendors recommend process adaptation and discourage ERP adaptations for the fear of potential performance and integrity degradation as well as maintenance and future upgrade difficulties - however, enterprises often find reasons to stray from that directive. Telkom decided to use the process modification and enhancement ERP adaptation strategy for its SAP Rl3 implementation, because management believes that by enhancing the speed and effectiveness of business processes before implementing SAP Rl3, the full benefits SAP Rl3 will be realised. Telkom redesigned 489 processes to take full advantage of the new system's capabilities, in particular its ability to simplify the flow of information. Taking a broad look at the results and comments made regarding Telkom's SAP Rl3 implementation, it was found that Telkom's SAP Rl3 implementation strategy resulted in quick achievements of a positive return on investment (ROI) when comparing pre- and postimplementation performance. Inventory levels, receivables, operating costs, order cycle times, stock turns, labour and distribution expenditures have all improved. On the other hand, fifty percent of the peer group benchmark baselines were not matched or exceeded by Telkom's measured post-implementation performance. It was found that Telkom's supply chain performance is tightly related to three areas of concern identified in this research: Problems with SAP and c-commerce integration, SAP's forecasting ability remains at a disadvantage, and the issue of Telkom not benchmarking their supply chain performance. It was also found that process improvement emerged as the principal element that enabled Telkom to realise the measured benefits of its ERP implementation. I SAP Rl3 stands for Systems, Applications and Products, Real time, 3-tier architecture.