Sap for Atlam

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Main Issues
Akademi Teknikal Laut Malaysia (ATLAM) is a wholly owned organization of MICT Berhad. The management of ATLAM had been asked to upgrade its accounting system with the PETRA group-wide SAP system. The person who is responsible to the changes of the accounting software is Zulkifli Osman, the Finance Manager of ATLAM. He had to severely assess the risks associated with the decision. The main problem arises is not on the cost of implementing SAP or Systems, Applications and Products in ATLAM but rather on the acceptance of the new system by the ATLAM’s staff.
The conversation between Zulkifli and Sani, the Project Manager; Gopal, the User Project Manager; Lim, User Representative; and Kamal, the Functional Analyst has come to the
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The last feasibility study is the operational feasibility which defined as feasibility that concerned with whether a proposed system will be used by the people in an organization and how useful the system will be within the operating environment of the organization. At the first of the discussion about the implementation of SAP system, the user representative seems to be unhappy with that implementation. He raises the issues and problems if the management wants to implement the system.
All the various feasibility measures are used to narrow the list of the alternatives. This techniques used in the capital budgeting model that consists of net present value (NPV), internal rate of return (IRR) and payback period.
Net present value (NPV) is the estimation of the future cash flows that are discounted back to the present using a discount rate that reflects the time value of money. The initial outlay costs or capital expenditures are deducted from the discounted cash flows to obtain the NPV. The initial outlay of SAP system consists of cost of training, hardware, initial software license and cost of customization work that approximately to RM5 million and its discount rate is 10%. From the analysis, SAP system has the positive and higher NPV of RM3.2 million that indicates that the system is economically feasible.
Internal rate of return (IRR) is the effective rate that results in an NPV of zero.

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