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Case iii 8 bat taiwan implementing sap for a strategic transition

We told them SAP is not new to Asia, and if it works in operating companies similar to ours like Singapore there is no reason why it should not work for us. Furthermore, the integrated information derived from the SAP system is going to help make our jobs more efficient and meaningful.

There was a huge buy-in. So we depended a lot on the proven template. As a team we said there should be minimal, minimal changes to the template.

Ponce, was reflecting on the recent SAP implementation in Taiwan. The project marked an important business transition for the Taiwan market, and it also represented a big victory for insourcing an SAP implementation at BAT.

What were the important lessons from the implementation approach and management of this project? How could they be amplified as best practices to other parts of the Asia Pacific region and BAT as a whole? Company Background British American Tobacco BAT is a 99-year-old company in the tobacco industry that has grown to be one of the top three global players through organic growth and acquisitions.

Industries, it spun off its financial services business in 1998 and merged with the global cigarette company Rothmans International in 1999. Small- to medium-sized end- markets typically report into an area cluster, a self-sufficient management unit led by an area director. An end market is headed by a country manager who reports to an area director, and each area director reports to a regional director. For example, the Asia Pacific region has five management units: The country manager for Taiwan has a report line to the managing director for APN, who is also the country manager for China.

After the tobacco market in Taiwan was liberalized in 1987, imported cigarettes were allowed to be sold via local agents.

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As a result of this global initiative, the importation and distribution of all BAT brands in Taiwan was consolidated, with China Merchants, Ltd.

In 1999, the BATRothmans merger resulted in another realignment. This case was prepared for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

  • SAP is a very powerful application for a small market;
  • One manager, who had just rejoined the Taiwan office in a supervisory role, was able to devote 70 percent of his efforts to the project;
  • We also do not have to worry about selling excess licenses when the number of users comes down;
  • The initial plan was for the four full-time members of the APSS development team to go to Taiwan for three weeks at a time and then return to Kuala Lumpur KL for the following weekend for personal reasons;
  • SAP is a very powerful application for a small market;
  • The other costs would include technology upgrades and direct expenses for travel and living expenses for the APSS consultants.

Personal names have been camouflaged at the request of British American Tobacco management. The authors are grateful to all of the BAT managers who were interviewed by the authors for this study. In April 2000, both distributors were merged and now operate under a new corporate entity known as Concord Tobacco Company.

The Rothmans merger also resulted in a more progressive portfolio of brands being available to the BAT Taiwan market. After the merger, the BAT market share was slightly boosted from 4.

Taiwan has more than 70,000 retail outlets, of which about 4,000 outlets are under five large convenience store chains: To provide a more level playing field for international tobacco companies, the Taiwan Tobacco and Wine Monopoly will have to be dissolved. The legislated change in Tobacco Tax legislation from a specific tax per 1 The launch of Dunhill 1mg in July 2000 contributed to the growth of the Dunhill brand family by 170 percent in 2000.

In the face of these changing market dynamics, and the BAT-Rothmans merger, BAT Taiwan commissioned Bain Consulting to do a full market potential study, to assess the size of the market opportunities and to identify the investment opportunities. This study identified Taiwan as one of the key profitable growth markets in the Asia Pacific region. It also highlighted various strategic options to pursue in order to realize BAT potential in this market: Under the new business model, Taiwan would be directly importing its own products and selling directly to key accounts e.

The plan was to begin direct importing by January 1, 2001. The direct-sales operation would be piloted first in Taipei and then rolled out to the rest of Taiwan sometime before mid-year 2001.

Managing information technology

The global CIO is located at Globe House and has direct reports with responsibilities for IT infrastructure, IT service delivery, e-business and business system initiatives, and IT people and processes. Under the global CIO, there has been an increased emphasis on global strategies to help reduce the costs of implementing integrated IT solutions and ongoing IT service delivery. Personnel with SAP and other IT skill sets are readily available in Malaysia at a cost quite low compared to the other markets, due in part to early SAP installations in the oil and gas industries and recent government incentives for economic growth in high-technology industries.

These responsibilities include identifying business requirements, identifying IT solutions, building business cases for IT projects, and managing support services including local, shared, and outsourced services. New Computer Systems for Taiwan: The Taiwan end market needed to have its own accounts payable and accounts receivable systems because these functions had previously been handled by BAT U.

It also needed a system to support direct selling and inventory management for multiple sales channels, not just for a single distributor. The Sage system was selected for less complex, smaller operations that did not need the functionality of SAP and that required a low-cost ERP solution.

  • Refer to Appendix A for details;
  • After the tobacco market in Taiwan was liberalized in 1987, imported cigarettes were allowed to be sold via local agents;
  • The third person on the technical team was responsible for creating ABAP reports;
  • The significant time difference between Taiwan and Europe was problematic, as was the lack of knowledge of the Chinese language;
  • Phase 1 could be done easily in 8 weeks, and phase 2 can also be done by January 2001;
  • The Phase 1 system would therefore support importing to just one customer:

However, because the Sage system did not scale well, it was no longer viewed as the best solution for BAT organizations in rapidly growing markets. Although Globe House sets strategy and dictates the standard IT platforms, each end market chooses which ERP platform standard to implement, as well as when to implement it.

  • For the remainder of the project, Lee took responsibility for the business process owner role for finance as well as logistics;
  • The country manager for Taiwan, Mr;
  • They knew that whatever we were doing in the past, things were going to be different, and they knew that what we had was cumbersome, that we could not go forward with a bunch of non-integrated systems.

During 1999 and the first six months of 2000, however, several BAT regions had gained much more expertise in implementing both ERP platforms. Some of these implementations were brought forward to achieve Y2K compliance. Other projects were undertaken as part of data integration initiatives for the Rothmans merger: Malaysia and Singapore were originally implemented based on the Symphony template; following the merger with Rothmans, however, the Malaysian implementation was changed significantly, and it is now regarded as using a different template.

Implementing SAP for a Strategic Transition 487 expected that SAP would become the solution for all end markets over time, if it could be implemented at a reasonable cost. Phase 1 would support direct importing and distribution to one customer a former distributor and would be operational by January 1, 2001.

Managing Information Technology

Phase 2 would support direct sales and distribution to key accounts and be operational within six months later.

An implementation partner with functional and technical SAP experience was therefore needed. IT resources would need to be contracted for periodic system requests such as new reports, as well as for the periodic software upgrades provided by SAP.

For a new, still small, Taiwan end market, project costs were a very important consideration, so the decision was made to not request a bid from an external consulting firm. We also do not have to worry about selling excess licenses when the number of users comes down. What is crucial is the skill competencies, at the right price, in a politically stable region. So cost and support capability become the most critical. Taiwan, unlike the rest of the Mandarin-speaking world, uses only the Chinese language for business transactions.

The significant time difference between Taiwan and Europe was problematic, as was the lack of knowledge of the Chinese language. Taiwanese are not all fluent in English, and the local system requirements would include preparing invoices and printing reports in Chinese.

The other costs would include technology upgrades and direct expenses for travel and living expenses for the APSS consultants. The Phase 2 costs would include an estimated U.

The project cost was based on several assumptions.

However, because many of the business processes would be new to the Taiwan office and few staff members had prior in-depth experience with integrated systems in general, few changes to the template itself were anticipated. Customization would only be done for legal or statutory reporting purposes.

Further, BAT Taiwan was very mindful of the dangers of customizing standard systems. One of the things I learned from my previous company and in BAT was that when we modified the system to suit our local operational needs, normally in the name of enhancement, we changed the system to a point beyond recognition. The business users would participate in the detailed requirements study, in cleaning up data to be converted, verifying the data conversion, and participating in system testing and system rollout.

Taiwan uses the traditional Chinese language, rather than simplified Chinese, as its official language. Chinese is the written form of the language; Mandarin is the spoken form of the language. BATS template remains at v3. There will be no SAP upgrade during the course of this project. The cost of v4.

BAT Taiwan project is to commence not earlier than mid-September 2000 and a lead time of 4—6 weeks is required to mobilize the resources once the project is awarded to APSS.

Study Case III-6 BAT Taiwan

Estimate is based on the high-level understanding gathered during the two-day SAP study in July 2000. The system specification, documented after the study, forms the basis of this proposal. The estimate takes into consideration efforts for 18 customized reports please refer to Appendix B in Phase 1. A total of 24 business processes will be covered in this project. Refer to Appendix A for details. Documents printed in Chinese are not a requirement in Phase 1.

Please refer to Appendix C for the case iii 8 bat taiwan implementing sap for a strategic transition agreement. Existing WAN bandwidth is sufficient but will need to reconfirm during the project. BAT Taiwan will assume project management, communication plan and execution, development of user procedures, and local infrastructure management. Project site and resources are based in Taiwan, and there is no necessity to travel outside of Taiwan head office.

Full-time resources are identified and assigned to the project as per project plan to ensure on-time delivery and quality output of project deliverables.

The business resources assigned to the project are subject-matter experts in their respective functional areas, and are either decision makers or are in a position to influence the process owners. Any request for COA maintenance shall be forwarded by the respective end markets to the custodian for action.

Because this capability would be required for doing business in Taiwan, it was anticipated that the module would be developed by SAP Taiwan. Second, a Chinese language module would be required because Taiwan conducts business communications almost exclusively in its official language.

All reports, including those produced by the GUI, and certain parts of the system needed to be in the official Chinese language. These four APSS team members would work at the BAT Taiwan offices, beginning with the project kickoff at the end of September 2000 until two weeks after the implementation date. Phase 1, to be initiated September 25 and completed by January 2, involved the modules to support direct importation: Phase 2, to be completed by June 2001, would involve implementing the additional modules needed for direct sales and distribution to key accounts, as well as the specific invoicing system required by the Taiwan government and software to support the reports in Chinese for the area offices.

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The Phase 1 system would therefore support importing to just one customer: Initially, the plan was to complete the Phase 1 development and testing within eight weeks by the end of November to provide a buffer for training the business users in not only the new system, but also in the process changes associated with the new business model.

The business users would begin with 18 customized reports. Although the APSS staff would be full-time, the team members from Taiwan needed to continue to perform some of their current functions during the project. Further, the team members would also need to help train temporary or new personnel that would be brought in near the end of the project. The Project Team The leaders for the project team brought together three sources of expertise from the three organizations involved: The country manager for Taiwan, Mr.