Management Case Study on Geneva Steel: Changing the Way Business is Done

Question

Task: Prepare a well-researched management case study on Geneva Steel and Answer the following questions in the case study:

1. What problems does Geneva have with their legacy systems?
2. What is the business, technology, strategic and business process rationale for Geneva steel to undertake SAP implementation?
3. Geneva plans to use SAP to change culture at Geneva. What are the advantages and disadvantages of this approach to culture change?
4. Where is Geneva Steel today and why?

Answer

Introduction
Geneva Steel is an industrial integrated steel mill located in Vineyard, Utah. The company’s customer base was primarily in Western and Central America where it dealt mostly with sheet and plate steel. The American Government’s largest industrial project during World War II was the Geneva Steel Co. The plant is located in an inward isolated place away from populated and developed areas. When the war was over, the U.S. Federal Government solicited bids and the plant was owned by U.S. Steel which ran the plant for 40 years until it shut down for a variety of reasons in 1987. In that very year itself, Chris and Joseph Cannon managed to successfully purchase the mill and reopen it under the new ownership of Basic Manufacturing and Technology of Utah.

1. What problems does Geneva have with its legacy systems?
The Geneva Steel Company is one of the oldest industrial steel-based production factories in Vineyard, Utah which had its foundations laid around World War II. Over the years it proved to be one of the most successful plants in Western America. As the initial days date way back in history, the systems have been developed and reformed multiple times in order to update to ongoing trends and advanced technologies. The information system has become a stack of different heterogeneous systems which are difficult to mutually correlate with. This is due to the different generations of the time these systems belong to. The company has a mainframe that forms the spine of the information system but however, it is a very primitive one. There are lots and lots of computers present which comprise the information system but they belong to different timelines and hence operators have a hard time working with them. The system generates a sizeable amount of data about transactions but somehow data from various transaction systems is failed to be produced. The systems generate millions of data points but they are generally not accessible due to the lack of integration. The company produces an operational report, a Daily Operations Report of the DOR and the DRO which is the Daily Report of Operations. These reports are capable of providing details about daily specifications and are crucial for making everyday decisions. But however, the system does not provide adequate knowledge about different customers and their orders. This system also limits the flow of information to the customers and lacks effective ways of communication between the company and the customers. The integration of data is a very crucial task of the managers. Currently, there are assigned personnel who are effectively responsible for ‘interface gates’ which forms a key factor in caring for and operating a program. Only a limited set of the technology staff are acquainted with every part of the system and to effectively assess and produce data, there needs to be an accountant assigned for every department.

2.What is the business, technology, strategic and business process rationale for Geneva steel to undertake SAP implementation?
The prevailing management and information system in the Geneva Steel Plant was unable to capture sufficient information and crucial transactional details and hence the need to reform. Geneva opted for SAP to change ongoing trends and facilitate workflow and enact balance. It involves fewer amounts of hardware and more concise and effective software systems. SAP is known to reduce legacy system applications anywhere from 50% to 90%. One of the most important benefits of SAP is that it combines OR, DOR and DRO. This creates a combined single report and hence there is no need for three different reports. The SAP doesn’t necessarily execute anything but provides the data in a more accessible and concise manner (Gaur and Mathar, 2020). It makes the transactional data more understandable and hence readily provides information that can be understood by all types of stakeholders. The owners can use this by strategically acting on the provided information. This gives scopes to the company towards maximising output and helps in better management of different sectors of operation of the company. It was believed that this would provide increased capabilities to the members by helping them focus more directly and effectively on different products and get organised details about the same (Reisartet al, 2018). This would give the company more room for development as more operational and functional information was being available to the people. The SAP system would also effectively integrate information. This system-based integration of information would give operators more detail about the working of different field personnel. The creation of such an organised structure would enhance the relations between the information and accounting systems. Hence a better framework is formed which helps in decision making (Gaur, 2020). As the company now supposedly would have more capable softwares and accounting measures, staff requirement and hiring expenditures could be cut off. A great deal of cost and management effort could be minimised hence. The companies have better opportunities for planning actions and managing sales and relations between the company and consumers. The more detailed statistics can provide more space to raise questions and point out minute flaws that often hinder production. The company owners saw this as an effective way of bringing about change in the ways of operation.

3.Geneva plans to use SAP to change the culture at Geneva. What are the advantages and disadvantages of this approach to culture change?
Usage of SAP was suggested by the company owners after the inefficiency of the prevailing management and information system. There had been opinions and thoughts which opposed the implementation of SAP due to the hassles involved (Elbahriet al,2019). There are various advantages of having an operational SAP listed as follows-

• Integration of Data - One of the probably highest benefits of SAPs, is that it reduces data redundancy and introduces a hassle-free data management system. The projects are successful if reduction of redundant data entry and automating inventory posting are set goals of the company. It will be very disappointing if companies expect the ERPs to enhance the individual output and efficiency of workers (Kopka and Kud?lka, 2019). SAPs are used for enhancing the cooperation of users and not their individual potential.
• Efficiency - The ERPs acutely focus on the integration of systems and data and does not depend on individual efficiency. Individual efficiency however may be affected by the introduction of ERP. This can also mean that there can be a scope of reducing employees and hence reduce the number of accountants and effective effort.
• Cost Reduction - Cost reduction is effectively applicable for companies who take accounting and reporting details seriously (Gaur and Mathar, 2020). The companies need to attend to the cost managing procedures and not just enact simple accounting methods to manage costs.
• Accuracy - The ERPs help in effective organising and management of data along with providing specifics for the operators to work on. It trains people to deal with accurate details and attain accuracy in work.

The Disadvantages are -

• Expensive - The introduction of SAP requires the installation of updated software and supportive hardware which is often expensive and involves complex installation procedures.
• Complex - The SAPs are effective in the definite fields of operation but however involve complex work methods and calculations (Rathnayaka, 2020). This system arranges data but requires highly trained staff to operate the system.
• It often creates internal conflict inside organisations amongst the employees and one major disadvantage is that it rolls out a new version every 6 months.

4. Where is Geneva Steel today and why?
The Geneva Steel mill, a site spanning across 1681 acres of land, which once boasted of 180 industrial buildings, some of which were almost a mile long, is now filling up with residential households. It was located close to a large potential workforce and its inland location was meant to be a protection from enemy invaders. During the 80s to 90s, an extensive development program started in Geneva. Throughout the 1990s, the Geneva steel mill was plagued by the proliferation of cheap foreign steel. The company had undergone heavy losses in the late 90s and in 2001 after months of losing money the company had to temporarily cease production. In 2002 it filed for bankruptcy for the second time in three years. Potential lenders declined to offer support and extend the plant credit and Geneva’s steel history was over.

Conclusion
One of the biggest and most successfully operational steel mills of America is the Geneva Steel production mill. This has been up and running from the times of World War II and has undergone numerous reformatory and development measures due to the updating of systems and trends in marketing and management. The company had a significantly scarily complex system of management and information and accounting. The mill changed ownership multiple times and hence the data systems are piles of technologies accumulated from different generations. For the upliftment and betterment of the systems, the new owners suggested the introduction of SME which helps in effective management and organisation of data. This approach had a number of benefits and also had some disadvantages, costly and complexity being two of them.

References
Elbahri, F.M., Al-Sanjary, O.I., Ali, M.A., Naif, Z.A., Ibrahim, O.A. and Mohammed, M.N., 2019, March. Difference comparison of SAP, Oracle, and Microsoft solutions based on cloud ERP systems: A review. In 2019 IEEE 15th International Colloquium on Signal Processing & Its Applications (CSPA) (pp. 65-70). IEEE.

Gaur, M. and Mathar, D., 2020. Business Transformation Challenges & Solution Approach in SAP ECC & SAP S4HANA System Landscape Optimization for Divestiture Driven Carve Out. International Journal of Computer Engineering and Technology, 11(3). Gaur, M., 2020.ERP Migration Challenges and Solution Approach Focused on SAP customers.International Journal of Advanced Research in Computer Science & Technology, 8(3), pp.15-21.

Kopka, M. and Kud?lka, M., 2019. Analysis of SAP log data based on network community decomposition. Information, 10(3), p.92.

Rathnayaka, I.D., 2020. A Review of Business Process Management using four SAP implementations at Smithfield Foods Company. Global Journal of Management And Business Research. 12(5), p. 230-245.

Reisert, C., Zelt, S. and Wacker, J., 2018. How to move from paper to impact in business process management: The journey of sap. In Business Process Management Cases (pp. 21-36).Springer, Cham.