Mobile Health Electronics

Executive Summary

Mobile Health Electronics Ltd is an Australian based manufacturer, specializing in the production of wearable monitoring devices for hospitals and retail outlets. Apart from their main office in Melbourne, the company also has other manufacturing plants in Liverpool and Beijing. The company also has a sales office in Sydney and planning to expand to India. Virtually, the company has been used individualized IT systems in their various facilities. However, with a fast-changing and highly competitive market environment, MHE realized the need to adopt a centralized information technology system. The company intends to adopt a new ERP system to maintain their competitive advantages and market share. In light of this, this report highlights relevant information and details to help the company make an informed decision regarding acquiring a new ERP system. The report starts by giving an analysis of the current situation, identifying the business requirements and drivers, as well as linking them to ERP functionalities. The report gives an overview of the software selection process and recommends a solution. Lastly, we explore the need for Mobile Health Electronics Ltd to embrace digital transformation and give recommendations based on findings.

Table of Contents

Executive Summary 2

A- An analysis of the Current Situation 4

Introduction 4

Project Scope 4

Audience 5

A1 – Strategic considerations 5

Benefits and Drawbacks of ERP Systems 5

A2 – MHE Business Requirements and Drivers 5

A3 – Linking requirements to ERP functionalities 9

B – Software Selection Process 16

Recommending the best ERP solution to MHE 16

B2- Recommendation of a Solution 17

C- Laying the foundations for business value and digital transformation through digital disruption 18

What is Digital Disruption? 18

Advantages and Risks to MHE not focusing on Digital Disruption 19

Specific ways to Improve MHE Digital Disruption Performance, Competitive Differentiation, and Future Growth 20

Recommendations 20

Summary 21

A- An analysis of the Current Situation

Introduction

Mobile Health Electronics is an Australian based company specializing in the manufacturing of healthcare mobile hand-held computers. Apart from their headquarters in Melbourne, the company also has branches in Liverpool, Beijing, a sales office in Sydney, and plans to expand their manufacturing and sales office in India. Traditionally, the company has been operating on separate Information Systems without a centralized system. However, with the emergence of highly competitive business environment, the company has realized that their ERP system has a fair share of its limitations, which is likely to affect their competitive advantage negatively. In particular, the company is considering the adoption of a centralized and robust ERP system that will allow process standardization across its manufacturing plants and offices. In this context, this report will analyze the scope of the project and identify the audience. The report will also give a comprehensive overview of the project requirements and drivers as well as the respective ERP functionality. Along with that, the report will recommend the most viable and appropriate ERP software for MHE. The report will review the impact of digital disruption, and why it is necessary for MHE to embrace digital transformation. Finally, the report will highlight the report findings and recommendations to the Board of Directors.

Project Scope

The target is to enable centralized procurement and sales functions as well as enhance the consolidation of their financial statements, sales analysis, and profitability across their outlets. The ERP system is also expected to enhance the supply chain system, where the organization will be able to keep track of their suppliers and link up with suppliers in the U.S.A. and New Zealand. Additionally, the company is committed to meet customer expectations and ensure client satisfaction. The organization intends to accomplish this through a website that is connected to the ERP system to help in management and analysis.  

Audience

The report is prepared for the Board of Directors to help them make an informed decision concerning the acquisition of a new ERP system.

A1 – Strategic considerations

Benefits and Drawbacks of ERP Systems

Ideally, there are several benefits of an ERP system to an organization. Among the countless advantages, adopting and implementing an ERP system improves access to data for operational decision-making, eliminates inefficient or outdated systems, and improves the work processes in an organization. Along with the benefits, an ERP system has various drawbacks. Firstly, the system is expensive and consumes a lot of time during implementation as well as the risk of project failure. The system could also resort in termination of staff members since the system replaces some of their roles. During implementation, transferring data from the old system to the new one could lead to data loss. Similarly, the system does not replace every system in the organization, which makes integration difficult. 

A2 – MHE Business Requirements and Drivers

Every business has a different way of doing its operations, starting from the highest level of business functions to the lowest procedures of shipping. In the context of an ERP system, business requirements and drivers usually represent both planned and non-negotiable existing processes that are intended to ensure smooth implementation. 

Organizational capability – during ERP implementation, the organizational capability is often classified as one of the intangible resources. In the case of ERP systems, organizational capacity reflects the ability of the company to commit resources and other requirements to ensure the successful implementation of the ERP systems.

Internal environment – The internal environment considers the organization compatibility and consists of top management support, user involvement, suitability of the software and hardware to organization needs, as well as data accuracy. In this case, the company’s top management must be willing to commit financial and human resources necessary for the implementation of the ERP system. 

System support – In its form, ERP system is a complex system that requires expert knowledge on the side of the employees. Thus, to ensure the ERP offers the kind of support that will allow the organization get maximum benefits, the organization will offer online training to their staff in the different locations.

Materials management – management of materials allows organizations to maintain an updated record of stock, deliveries, and orders. 

Sales order processing and management allows organizations to track and analyze sales data, automates transactions, prepares customer orders, and monitors performance. The functionality will allow automated sales functions for the company. 

Automated Marketing – currently, Mobile Health Electronics Ltd uses traditional marketing methods where the CEO and marketing managers go to trade fairs around the world to market their products. Automated marketing will allow the organization to use a website where they can promote their products and sell them online. 

Human capital – a majority of companies, invest in ERP due to its capability to manage human capital resources. Human resource management allows management of the organization’s workforce and monitoring of individual productivity. Within MHE workforce engagement is an essential element and adopting an ERP system will guarantee the company and effective and efficient method of managing, supporting, and utilizing the innovativeness of its workforce.

Financial automation, consolidation, and management – ideally, the company has been maintaining separate financial records. Adopting a centralized and robust ERP system will help the company consolidate their financial statements for easier budgeting and management.

Supply chain management – the ERP capability allows manufacturers, distributors, and retailers to manage easily the procurement process, distribution, and delivery, as well as material resources. Currently, MHE outsources raw materials from Korea, Japan, and Germany, while seeking to work with more suppliers from U.S. and New Zealand. The functionality will ensure management of the supply chain, reduce the task of business tracking, and eliminate the human error risk for improved productivity.

Standardization and speeding up of the manufacturing process – the ability to manage the manufacturing and distribution process ensures efficiency and cuts down on expenditure. Adopting this functionality will ensure standardized operations across the manufacturing and distribution process in all their other centers. 

Customer service management – MHE realizes that their customers are the real deal for their continued success. Customer Service Management functionality will allow the company to improve customer experience, get client feedback, and respond to them efficiently to ensure satisfied customers and increased sales. 

A3 – Linking requirements to ERP functionalities

Business Requirements and Drivers	Specification	Type of data/information required for successful completion of the business process	Appropriate ERP functionalities (Bagchi 2010)	Justification
Organizational capability	Requirement	Willingness of the organization to commit resources, energy, employee morale, shareholders support, and financial benefit	Integration capability	For the ERP to be successful, it must be able to integrate seamlessly into the organization. Organization capability falls under integration capability because it significantly determines the adoption and implementation of the ERP system
Internal environment	Requirement	Management support, user involvement, suitability of the software and hardware to organization needs, and data accuracy	Integration capability	The internal environment is the intuitive portal that allows the integration of the ERP system into the organization. Ultimately, it falls under integration capability because it ensures that the organization embraces the system and staffs are able to use the system quickly and effectively.
System support and user training	Requirement	Training, maintenance, helpdesk support, phone, email	Support	For an ERP system to function properly, it must get the kind of support that will allow the organization to reap the most benefits. The ERP is also a complex system, and the support functionality ensures the organization receives system support and user training to provide skills on how to use the system and basic troubleshooting.
Materials management	Driver	Availability of materials, stock, store inventory, and proper planning	Inventory and material management	Inventory and materials management enables organizations to monitor their orders, deliveries, and current stock. The functionality gives manufacturers, distributors, and retailers the ability to meet their materials needs and eliminate unprofitable inventory
Integrate customer order information and sales management	Driver	Pricing, quotations, sales order processing, bill of materials, transaction reports, credit card processing details, and invoices	Sales and distribution	The sales and distribution functionality accommodates requirements under order placement, scheduling, invoicing, and order shipment. Instead of calling the various retail outlets or directly the specific customers, the sales and distribution functionality will automate the whole transactions and order process for accuracy and increased productivity.
Automated Marketing	Driver	Web storefront tool, marketing resources, contact management, email tools and integration	Customer service management	Among the various functionalities, an ERP system offers valuable capabilities in customer service management. Automated marketing falls under customer service management because it improves customer experience by marketing the organization products.
Automated human capital and networking of opportunities	Driver	Employee performance data, knowledge and skills, talent management, networking opportunities information, clients offers	Human resource management	Human resource management is the exceptional ability to manage and analyze human capital resources. Automated human capital management is valuable solution to monitor individual productivity and talent management.
Financial automation, consolidation, and management	Driver	Accounts payable and receivable, invoices and billing, deposits, budget report, bank reconciliation, cost calculation and analysis, general ledger, expenses report, multiple currency support	Accounting and Financial	One Of The Greatest Functionalities Of An ERP Is The Ability To Automate Accounting Operations. Under accounting and financial, MHE will be able to automate the finances, consolidate, and manage computations.
Supply chain management	Requirement	Supplier capability, acquisition of raw materials, quality control,  quality assurance management, currency support	Supply chain management	Supply chain management functionality is particularly valuable for companies because it allows management of diverse processes including the procurement process, distribution, acquisition of materials, and delivery planning. The supply chain will streamline the supply chain and ensure smooth operations the organization.
Standardization and speeding up of the manufacturing process	Driver	Customer preferences, product data management, process synchronization, capacity requirements, quality assurance	Manufacturing and distribution management	Manufacturing and distribution management is particularly important because it aids in the completion of tasks such as production control, quality monitoring, and distribution schedule.
Improve customer value	Driver	Customer preferences, customer account management and dashboard, organization website linked to the ERP system, contact management, email tools integration, supply chain management	Customer relationship management	MHE understands the power of the consumer and is focused on adding value as well as customer satisfaction. The Customer Relationship Management functionality, allows organizations to improve the customer experience with value-added services and customer satisfaction.

B – Software Selection Process

Recommending the best ERP solution to MHE

At the most fundamental level, the cornerstone of finding the right ERP system lies in the understanding of the right criteria to select the best ERP system. Apart from the knowledge of system’s functionalities and the kind of support and training that will be required for proper implementation, we highlight more important and relevant information for the selection of a new ERP system. Firstly, acquiring a new ERP system is not a small issue and can be a difficult process considering the costs and adjustments involved to enable smooth transition (Epicor n.d). In light of this, the new ERP system should have proof of dedication to providing strategic applications and functionalities to support the business model even in future with at least a ten-year lifespan. Secondly, the system should be able to provide solid solutions to the organization. Leaders in the ERP industry emphasize the importance of acquiring a system that delivers technology-driven solutions for sustainable business advantages. Thirdly, the success of a new system lies on the duration it takes to implement and the amount of business change and value expected. The quick business advantage is possible if the implementation process is fast. The best ERP system should be implemented at least within the first six months after the process begins. Along with that, it is important to understand; every business is unique. The ERP system should be tailor-made to allow the flexibility and functionality of a solution that satisfies the unique needs of the organization. Additionally, it is important to enquire the true cost of the ERP solution, the technologies offered by the ERP, and vendor’s situation and reputation. Ideally, this and more information can be found with the manufacturers of ERP systems, customer reviews, and textbooks. Manufacturers of ERP systems outline the characteristics of their ERP systems guiding companies through the selection criteria and vendor checklist. Customer reviews also offer a credible source of information to customers who want to purchase a specific model of ERP systems. Textbooks often provide general information to organizations seeking to acquire an ERP system, with some guiding clients on what to look for in a system. 

B2- Recommendation of a Solution

Armed with the specific business requirements and drivers, the next step is to perform a preliminary research for the best ERP system to meet the needs of Mobile health Electronics Ltd. Virtually, ERP systems come in different forms such as Sage ERP X3, SAP Business Suite 4 SAP HANA, and the SAP ECC6 among others. The Sage ERP X3 is a fast, simple, and flexible ERP system, with the ability to accelerate the supply chain, speed up the process cycle time, ensure compliance, and give actionable insights. SAP HANA is an affordable and high scalable ERP system with integrated transactions and analytics. The system comes with an innovation platform and allows real-time analysis, supports big data processing, enhanced user experience, and allows new applications. The SAP ECC 6.0 is one of the most recent versions of ERP products, with capabilities of providing end-to-end software support (Fast Track n.d). The system supports manufacturing processes, finance, sales, human capital, project management, and customer relationship. Along with that, the software offers an option of developing from scratch or tailoring the existing system to meet the specific needs of the organization. In this case and consistent with the needs of MHE, the most feasible and viable ERP solution will be the SAP ECC 6.0. Another aspect of the SAP ECC 6.0 is that it should be integrated with Business Intelligence modules that will enable MHE to receive dynamic and real time reporting of their operations regardless of the location.  

C- Laying the foundations for business value and digital transformation through digital disruption

What is Digital Disruption?

In its simplest definitions, digital disruption is the transformation triggered by emerging digital technologies or business models (Khare, Stewart and Schatz, 2017). Usually, when innovative technologies or models influence the value of existing products or services in the marketplace, this is termed as digital disruption. A perfect example of what digital disruption means is the case of Kodak or Nokia. From the beginning, Kodak was hugely successful in the camera and film sector. However, they failed to react to the demands of the market for digital cameras and easy photo sharing, an element that led to their downfall. The same case happened to Nokia mobile company. Although several other factors played a part in the downfall of the company, the failure of the company to react to the invention of smartphones contributed to the company’s woes and losing to Samsung and Apple Inc. Another example is the Encyclopedia Britannica. For more than 200 years, the company dominated the encyclopedic world of information, having mastered the art of selling libraries. Unfortunately, everything changed for the company as computer-oriented businesses came to life leaving the company behind. 

Advantages and Risks to MHE not focusing on Digital Disruption 

For many businesses, digital disruption can turn into a nightmare especially if the company is not ready to move with the pace of these changes. Although there are several benefits associated with adopting innovative technology, there are also advantages for those who choose not to focus on digital disruption. Firstly, embracing digital transformation is a costly and complicated process (Ustundag and Cevikcan 2018). It requires a commitment to renovate business models, come up with new strategic initiatives and a digital workforce. Organizations must also adopt new models that simplify and transforms Information technology operations. Besides, organizations must respond quickly and might often disrupt normal operations to pave the way for the new business model. In this case, by not focusing on digital disruptions, MHE avoids extra costs, reconstruction of their current business model, and eliminates disruption of normal business operations. However, on the other hand, failure to realize the transformational potential and adopt digital business has several business risks for MHE (Martin 2017). Just like Nokia, Kodak, or Encyclopedia Britannica, the company could be displaced as pressure for new business demands grow, and new business models arise. Digital disruption also represents a change in consumer needs, and working with the tide ensures that companies meet the emerging needs. Failure to embrace change could mean lose of existing customers as they move on to other firms that meet their needs. When this happens, not only will MHE wash off their wave of success but prevent new business growth and opportunities.  

Specific ways to Improve MHE Digital Disruption Performance, Competitive Differentiation, and Future Growth

Digital disruption is a wind of change that is not going away, regardless of the industry. With the current economic outlook, a majority of leading industry players will be gone within the next decade if they do not keep up with the emerging changes. Similarly, acknowledging and embracing digital disruption is not enough; companies should be ready to improve performance, competitive differentiation, and growth in the future. In order to do this, firstly, organizations should not face disruption alone, rather they should collaborate to innovate with partners such as advertising agencies, innovation companies, customers, and technology companies among others (Carayannis and Hanna 2016). Similarly, digital transformation is not only about embracing new technology, but also about changes in organizational culture. For leaders and organizations, they must be willing to alter the organizational culture to accommodate change. 

Recommendations

Ideally, digital disruption presents business leaders with a challenge of systematically transforming their organization with urgency and profound change. Embracing digital disruptions is a significant journey for MHE organization. Going forward, MHE should be able to align the organization with the overall digital business strategy to improve their competitive advantage with their customers. The company should also start experimenting with more responsive ways such as reinvention of business processes and capabilities. Along with that, it is essential for MHE to foster leadership behaviors that can fuel a digital organizational culture. The strategy should focus on setting the direction by engaging the relevant stakeholders using collaboration techniques to encourage a culture of innovativeness in the organization.

Summary

The ERP report reviewed the current state of the Mobile Health Electronics Ltd and their IT systems. Based upon the assessment and analysis, we made the following findings and recommendations. The ERP system is necessary for the company’s centralized and robust IT system. The drawbacks outweigh the benefits of the ERP system to the organization. Consistent with the ERP system requirements and drivers, the most appropriate ERP solution for MHE is the SAP ECC 6.0, which is one of the recent models of ERP systems with end-to-end software support. The system is also viable for MHE organization due to its functionalities that supports manufacturing, finance, sales, human capital, project management, and customer relationship. Importantly noted, the adoption of a new ERP system by MHE is consistent with increasing demand of organizations to embrace digital transformation. Failure to focus the future of the organization on digital transformation can lead to MHE losing their competitive advantage with the consumers as well as losing their market share.

Bibliography

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Fast Track. (n.d). The benefits of SAP ECC 6.0. Available at : http://www.fasttrackph.com/sap-ecc-6-0/ [Accessed 25 Oct. 2017].

Khare, A., Stewart, B., and Schatz, R. (2017). Phantom ex machina: digital disruption’s role in business model transformation. Cham, Springer.

Martin, S. (2017). Why we must embrace digital disruption and ensure no worker is left behind. [online] the Guardian. Available at: https://www.theguardian.com/sustainable-business/2016/sep/26/why-we-must-embrace-digital-disruption-and-ensure-no-worker-is-left-behind [Accessed 25 Oct. 2017].

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