KEDA’S SAP IMPLEMENTATION

Prepare the “KEDA’s SAP Implementation” case. ERP projects are expensive and risky.
#1-Why did KEDA decide to embark on an ERP implementation project?
#2-What are the major processes of implementing an off-the-shelf ERP system?
#3- Leadership plays a pivotal role in the successes of ERP projects. Which “leadership best practices” did the Keda managers engage in?
#4-Are the particular strategies adopted by Keda in its ERP project generally applicable to all ERP implementation?
#5-Culture plays an important role in any project implementation, and perhaps especially for an ERP implementation because the ERP concept originated in a western cultural setting. How were Keda’s cultural characteristics leveraged in bringing about project success?

KEDA’S SAP IMPLEMENTATION

Terrance Fung and Professors Yulin Fang, Huaiqing Wang and Dernck Neufeld wrote this case solely to provide material for class
discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may
have disguised certain names and otheridentifying information to protect confidentiality.

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Copyright © 2011, Richard lvey School of Business Foundation Version: 2011-01-20
Dr. Fan Zhu, vice general manager of Keda Industrial Company Ltd. (Keda), was utterly satisfied with the
outcome of the SAP project. A mere five months after forming an implementation team, Keda had
successfully deployed SAP as its enterprise resource planning (ERP) solution, and the system was quickly
paying for itself through more efficient inventory management. The success was all the more remarkable
given that an estimated 80 per cent of ERP implementation efforts in China failed.1 Despite the success,
Zhu was uneasy. Keda had a large backlog of other information technology (IT) projects waiting in the
pipeline, and Zhu wanted to carefully evaluate the SAP project to determine what had been done right,
what had gone wrong and what Keda had gotten away with due to blind luck.

COMPANY OVERVIEW

Founded in 1992 by Lu Qin, with an initial capital outlay of only 90,000 Chinese yuan (CNY)
(US$l3,500), Keda began as a small manufacturer of ceramics machinery located in Shunde, in
Guangdong province. At the time, the global ceramics machinery industry was dominated by European
companies. Keda modeled its business after these market leaders and enjoyed rapid growth in the local
Chinese market through the 199os. In less than a decade, the company was recognized both as one of
China’s top 500 national machinery manufacturers and as a top 10 building materials machinery
enterprise in the world. By the early 20oos, Keda had surpassed most of its competitors to become a
world leader in building materials machinery, second only to SACMI of Italy (www.sacmi.com). Keda
Industrial (stock symbol 600986:CH) became a listed company on the Shanghai Stock Exchange in 2002.
In 2009 Keda reported total revenues of more than CNYl,425 million (US$209 million), almost double
the amount of its 2006 revenues of CNY93l million (US$119 million).

7 Liang Zhang et al., “Critical Success Factors of Enterprise Resource Planning Systems Implementation Success in China,”
in Proceedings of the 36th Hawaii International Conference on System Sciences Januafy 6-9 2003, Computer Society
Press, Washington, DC, 2003, pp. 236-245.