S/4HANA Configuration

Case Phase 0-
Introduction
Submitted By:
Faria Mehboob L191634
Sohaib Bhatti L191641
Contents
PART 1.........................................................................................................................................................2
How was Global Bike Inc. founded?.......................................................................................................2
PART 2.........................................................................................................................................................3
What is the Global Bike’s Current Senior Management Structure?.......................................................3
PART 3.........................................................................................................................................................4
Based on the organization chart that you sketched in the “corporate overview” task, can you
already identify implications on the ERP implementation?...................................................................4
PART 4.........................................................................................................................................................5
After reading about Global Bike’s IT strategy, what weaknesses exist in the different organizational
units prior to the ERP implementation project?....................................................................................5
Case Scenario Issues............................................................................................................................5
Underlying Issues.................................................................................................................................6
Symptoms of Problems........................................................................................................................7
SAP ERP in HRM...................................................................................................................................8
The cost associated with SAP Implementation....................................................................................9
PART 5.......................................................................................................................................................11
In addition, which objectives are already mentioned and which benefits are expected?..................11
Cost Savings in the Big Picture – Why SAP ERP?................................................................................11
Other benefits why Global Bike should consider any ERP software..................................................11
References................................................................................................................................................13

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PART 1
How was Global Bike Inc. founded?

John Davis, an American who was a world-renowned bicyclist and a mountain racing champion.
He won numerous downhills and cross country championships. He created a company
“Frankenstein Bikes” in Dallas, United States, to produce trail bikes. He started producing
custom trial bikes and sold them through a network of specialized bike dealers throughout the
country. At the same time in Heidelberg, Germany, Peter Schwarz, who was an engineering
student started to compete in regional touring races on weekends. As time passes he formed a
company “Heidelberg Composites” to manufacture lightweight touring bike frames where he
started to design and build road bikes based on the ultra-light composite frame, on the basis of
his engineering knowledge.

John Davis and peter Schwarz met in 2001 and merged the two companies to form Global Bike
Inc. Global Bike Group headquarters is located in Dallas, United States and registered as a US
company. The company has a subsidiary “Global Bike Germany GmbH” whose headquarters is
located in Heidelberg Germany. [ CITATION Glo19 \l 1033 ]

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PART 2
What is the Global Bike’s Current Senior Management
Structure?

John Davis and Peter Schwarz are the co-CEOs of Global Bike Inc. John is responsible for sales,
marketing, services & support, IT, Finance, and human resources groups. While Peter is
responsible for research, design, procurement and manufacturing groups from an
organizational reporting perspective. Simple we can say that Peter is responsible for spends
money (research) and builds products (productions) while John sells a product (marketing) and
brings in money (sales). The company has approximately 100 employees. Two-third of the
employees are in the US and the remaining are employed in Europe. [CITATION Glo19 \l 1033 ]

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PART 3
Based on the organization chart that you sketched in the
“corporate overview” task, can you already identify
implications on the ERP implementation?

The current senior management has a centralized hierarchal structure where the senior
management takes over the major responsibility for each department, Moreover, a matrix
structure exits since GBI is operating in two subsidiaries i.e. US and Germany, where employees
are grouped into departments of specialization and further separated into divisional/regional
projects and products. However, having such a complex structure requires an integrated system
which GBI currently lacks, The implications of ERP implementation include that inter-
department and inter-division flow of information through the hierarchy can be achieved,
cooperation and problem solving decisions can be made by having employees on the same
page on the current situation at all times. Furthermore, senior managers play a vital role in any
ERP implementation. Their involvement is extremely necessary for the success of a project. Any
form of ignorance may cause ineffective decisions and delayed operations.

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PART 4
After reading about Global Bike’s IT strategy, what
weaknesses exist in the different organizational units prior to
the ERP implementation project?

Case Scenario Issues

Global Bike have trusted specialty partners who are responsible to develop complex materials
and make sure that the element of innovation is a apart of the material and structural
capabilities of the frames required by Global Bike. Goods assembled and finished are then store
in local warehouses and regional distributions. However, the case of missing order of 30 frames
lead to production delay. The production supervisor faced the issue of missing record for the
order in the internal system and log sheets which led the Shop floor worker to physically count
the inventory and check for the missing order. Furthermore the issues include Production
advisor having a production schedule showing order to be received while the warehouse
supervisor has no such record from his end in the shipment log. Moreover, the production
supervisor chose to make order directly to the shipping clerk who then instead of transferring
the order request in a log, noted the order on a sticky note. In addition to this, the warehouse
has a small team to manage large incoming orders

The order made by Dallas Warehouse was actually received by the preferred vendor Space
Bikes but the shipment was destroyed and hence returned. Accountant Payable specialist after
receiving two invoices for similar order enquired the warehouse supervisor to confirm if the
same order recorded week apart was due to some mistake. The warehouse supervisor cleared
up the situation of returning damaged goods to the vendor, possessed a return slip for it and
updated the inventory list. However, no such return of goods entry was visible to the account
payable specialist and left her with the option to make lengthy adjustment and unnecessary
transaction to fix this problem by reversing the first invoice payment and cancelling it, then
issuing second invoice payment. Making such adjustments require CFO approval and there lies
a possibility for other employees to get confused when viewing the financial reports since the
information of adjusted logistics will be missing from the report.

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Underlying Issues

Communication breakdowns are a part of most companies irrespective of their size and these
problems are usually magnified with a disintegrated information system. In the Global Bike
scenario when the order was not recorded due to negligence from the shipping clerk, the
warehouse met an unexpected urgent order to meet, this could have led to several problems
such as, the warehouse inventories might not be present enough. To compensate the issue,
Production would require scheduling extra labor costing both money and time, resulting in
higher production costs for products and delayed orders. Second, because materials such as
frames are custom products purchased from a the preferred vendor Space Bikes, and in
urgency another vendor Space Bikes Composites was contacted to send urgent orders, a
sudden increase in demand can cause shortages or even a stock out of these materials for
manufacturers.. Getting these materials from a different vendor might require accelerated
shipping, further increasing the cost of production.[ CITATION Ell13 \l 1033 ]
The production Supervisors inventory data are maintained in an Excel log. The Records on the
log are not updated in real time and do not signal if the order has been successfully received by
the warehouse, and has been shipped or not. This not only Creates problem if the Production
division demands high volumes of orders, but also generates a problem for adjusting
production to reflect actual sales.

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Symptoms of Problems

Shortage of professionals

Lack of inter-disciplinary talents who have expertise in both IT and management departments,
the interdisciplinary professionals can add value to the organization. This problem occurs
especially in the small and medium-sized enterprises such as Global Bikes because of the
weakness in their management level.

Talent Introduction Mechanism

GBI lacks in effective talent introduction mechanism to attract talented people with hands on
experience, ability to tackle technical glitches and with the right skill to identify deep seated
issues.

Insufficient Education and Training for Employees. 

The process of refining of talents requires investment of time as well as money, GBI might have
missed out on not willing to pay much investment to the education and training of employees
due to lack of an in-depth understanding of ERP.

Poor Incentive Mechanism

ERP projects might not have been supported enough by superior administration departments
before. Since the application of ERP requires the support of all involved departments, managers
still hesitate to position departmental backbones on the ERP implementation. Eventually this
might also influence the employee enthusiasm to work and disrupt other innovations if
superiors interfere too much with the implementation.

Lack of Exterior Consultation or a Supervision System

GBI may have neglected the necessity and importance of introducing an ERP by ignoring the
right direction io implement its functions. The implementation of ERP should be carried out

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under the direction of exterior professional organizations and the supervision of a special
system.

SAP ERP in HRM

To prevent such future problems to occur a SAP ERP can be implemented. The ERP can control
many of the above mentioned symptoms to reoccur.

One of the major benefits of SAP ERP in HRM is the centralized database. An integrated
database helps the management to stimulate the information very timely minus any chaos. An
HR software like this in workplace helps the business organization to record every data related
to employees such as name and employee code, attendance, leave days, work history,
performance review, through these information different employee benefits are automatically
generated from the database. It therefor helps the management to take on time decisions and
make sure everything is aligned and organized. Another benefit that an SAP ERP is that it offers
talent acquisition. Implementation of ERP for HRM makes sure that the rightly skilled people
are placed in the most suitable job positions. ERP helps in identifying the skills required under
specific job descriptions, enables monitoring of the employee onboarding training, tracking
employee performances and problematic areas that can be worked on in future. ERP for HRM
also helps in collecting the performance feedback of the employees. This procedure of
retrieving data is vital for a business, since it determines the stages of company’s progress and
hurdles in terms of work. Timesheet, Employee Appraisal features helps in framing the right set
of information regarding employee’s obligation and sincerity. This also helps the management
to timely inform any issue that has occurred in case of complication and delay. Overall the ERP
acts as a facilitator boosting the internal communication and forming the sense of trust
between employees With the help of SAP ERP,  a cut down in labor can be achieved. For
instance a task of 5 employees needed on a task before could now be done with HR software,
needing only a single person. This in turn also, saves the time for performing a function
providing the business more time and platform for strategic decisions. With the use of human
resource management tool, the business can make use of the employees saved time and

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energy and a more productive employee community can be developed with the help of ERP in
HRM. [ CITATION Rol19 \l 1033 ]

The cost associated with SAP Implementation

The initial cost of a SAP ERP might be very high when a business first looks to implement an
integrated operational system. However, multiple factors can influence the price of an ERP
system. Some common factors that affect the price of an ERP software system include.

 Number of users
 Types of the application needed and number required
 Level of customization needed

Implementation

Global Bike Inc needs professionals who install and configure SAP software. SAP is complex
software, so the company might have to change or upgrade the operating systems. The
company also might have to change hardware or software in order for the ERP system to run
properly. These costs will also be included in the implementation costs. It ultimately increases
the ERP costs.

Training

SAP is a complex software application, so the employees of Global Bike Inc. also need training
on how to use the program. It will also incur time to give training to the employees. So, the
money is needed for this purpose, which will ultimately increase the cost of the software. It is
difficult to estimate the training cost with accuracy.

Maintenance

There is a maintenance cost associated with the use of the software. Maintenance costs for an
ERP system typically run between 15-20% of the initial purchase price. [ CITATION TYN19 \l 1033 ]
It is also a considerable amount which a company should keep in mind.

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Support

There is a possibility that when employees start using SAP, numerous bugs will be shown up.
So, the company has to be sure that the vendor who is providing software will also provide
technical support. Technical support will also have an additional amount which the company
has to pay to the vendor.

Skilled Labor

Global Bike needs employees who know the usage of SAP (ERP). As, there are fewer people in
the market who know, how to use the SAP software. So, skilled labor is required and the skilled
employees will demand higher pays. Which ultimately end up increasing the cost for the
company.

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PART 5
In addition, which objectives are already mentioned and which
benefits are expected?

Cost Savings in the Big Picture – Why SAP ERP?

The financial benefits provided by an SAP system can be difficult to calculate because
sometimes ERP increases revenue and decreases expenses in ways that are difficult to measure.
A return of investment (ROI) is a financial metric of profitability that is widely used to measure
the return or gain from an investment [ CITATION Inv \l 1033 ]. An ERP system’s ROI can be
difficult to calculate there are many intangible benefits are associated with it [ CITATION Mon \l
1033 ].

An ERP software system offers accuracy and automation which reduces the operational and
administrative costs of the business. An ERP system allows businesses to improve their
operations while giving managers the information they need to make decisions effectively and
efficiently. ERP system improves communication between all departments across the business.
Effective communication will result in increased worker productivity. Each department will have
access to a central database, which lower costs associated with maintaining multiple data
centers. It will also result in saving employee time and cuts overall business expenses.

Other benefits why Global Bike should consider any ERP software

Improved Collaboration

Features of SAP can vary depending on the version that is being using, but generally, all the
versions improve collaboration in some way. The central database makes the ERP unique. With
this database, all departments are in touch with one another and it reduces errors, which
ultimately helps the company to reduce its costs.

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There is no need to merge information across various systems. Because all the data is compiled,
shared, stored and accessed through a single system. Without ERP, there are a lot of chances of
human error, which can be reduced using SAP.

Improved Inventory Monitoring

A major challenge faced by Global Bike is tracking and monitoring its inventory levels. SAP helps
to track inventory levels at different warehouses. By the improved tracking of inventory by SAP,
managers can get real-time data on their inventory which helps them to make accurate
decisions. [ CITATION OSh \l 1033 ]

Improved productivity

Global Bike is using traditional methods to generate reports, monitoring inventory levels and
processing orders which takes a lot of time to accomplish. These processes lower employee
morale and results in human error. SAP will help them to eliminate redundant tasks and
automatically updates all the concerned department after every transaction. [ CITATION OSh \l
1033 ]

Better Analytics

There is no central database Global Bike Inc. due to which they are facing serious issues. A
central database of information helps managers to improve analytics and reporting. ERP
software makes it easier and faster for you to generate reports which help management to
make decisions timely and efficiently. [ CITATION OSh \l 1033 ]

Risk Management

Companies like global bike Inc. which are operating in more than one country, it will be difficult
for them to keep track of all the regulations imposed on the business. Many ERP offerings are
build with these regulations in mind to help maintain compliance at every stage. SAP provides
built-in auditing tools to assist with documenting things like tax provisions etc. Forecasting tools
help managers to make decisions effectively and efficiently. [ CITATION OSh \l 1033 ]

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References
(n.d.). Retrieved from Oracle: https://www.oracle.com/pk/applications/erp/what-is-erp.html

(n.d.). Retrieved from Investopedia: https://www.investopedia.com/articles/basics/10/guide-

to-calculating-roi.asp

Global Bike Group (May 2019).

Role of ERP in HRM. (2019, July 15). Retrieved from Open HRMS:
https://www.openhrms.com/blog/role-of-erp-in-hrm

Ellen Monk, Bret Wagnor. (2013). Implementing ERP Systems. In Concepts in Enterprise
Resource Planning (pp. 203-204). Cengage.

Monk, E., & Wagner, B. (n.d.). In Concepts in Enterprise Resource Planning (p. 39).

O'Shaughnessy, K. (n.d.). Retrieved from SelectHub Confidence in Software:

https://www.selecthub.com/enterprise-resource-planning/why-erp-systems-are-
important/

TYNDALL, G. (2019, November 20). The Real Cost of an Enterprise Resource Planning System.
Retrieved from The BalanceSmall Business: https://www.thebalancesmb.com/how-
much-does-an-erp-system-cost-14132

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