Successful and Failure ERP Implementations
BIS 601 – Information Systems
Global ID: Akiti1m
Student ID: 674093
Enterprise Resource Planning (ERP) is one of the business management software which consists of a group of integrated applications to perform several activities or actions such as planning of the project, manufacturing, managing the inventory, marketing and sales of products or services. ERP system provides components or modules that can support different types of business activities or functionalities.
Now a days the competition in the market is very tough and complex, so every organization or company wants to be in the top position. To do so every company is showing more interest towards implementing ERP, to do a successful and efficient ERP implementation should be followed, and they are strategic planning and requirement analysis, gathering resources for the project, reviewing the procedure, implementing the procedure, training the employees and testing, evaluation and go live for the delivery or release.
There are so many successful and unsuccessful ERP Implementations, and some of them are explained below.
Three ERP Implementations which are failed:
1. Oracle Fusion Applications: Fusion applications are the application which is developed by Oracle by implementing Enterprise Resource Planning (ERP).
Oracle Corporation: It is a multi-national software organization which is specialized and focuses on developing database software, enterprise software's, building and developing the database tools, supply chain management (SCM), and customer relationship management (CRM).
About Failure in developing oracle fusion applications: By the year 2006, oracle have completed the 50% of developing fusion applications. The main aim of oracle to develop fusion applications is to build and provide the standard applications for the next generation. Even till 2010 also oracle was unable to release the first version of fusion applications. The fusion applications are delayed to release because it is integrating with the business intelligence, web 2.0 to make a clear difference in the structure of standard applications. On the other hand at the same time two oracle notable executive have left the organization.
• My opinion is to develop the fusion applications as service oriented architecture (SOA) initially, then if those applications are successfully run and implemented, go for the integrating those applications with business intelligence, CRM, SCM, web 2.0 and etc.
• Because developing the standard applications is a quiet bit complex, and the goals of the project may become unreliable.
2. FoxMeyer Drugs: FoxMeyer Drugs is one of the top five pharmaceuticals and drugs distributor. FoxMeyer Drug is subsidiary or acquired by McKesson Corporation. It was founded in the year 1903 and is have its headquarters at Carrollton, Texas.
ERP Implementation in FoxMeyer Drugs: FoxMeyer Drugs implemented the ERP to increase efficiency. To Implement ERP in their organization they had started Project Delta III in 1993. To do so FoxMeyer Drugs conducted a research or survey and evaluation of the product in the present market at that time, and also buy SAP R/3 in the same year.
The FoxMeyer Drugs project Delta III was in risk and unsuccessful due to several reasons or problems such as scope or requirements (defining or identifying the risks in the software project) of the project, environment, execution and customer mandate.
• Project team must have the high level technical and operational skilled employees or people to choose the software and work on it.
• Implement or design a strategy to solve and run the project efficiently if any errors or failure occurs.
• There should be more coordination and understanding between the users and employees and higher authorities at managerial level.
• Complete and effective testing should be done before the product or service delivered to the customer or end user.
3. Levi Strauss: Levi Strauss is the branded clothing company which manufacture and export cloths such as jeans, shirts, t-shirts, accessories such as wallets, belts, shoes, socks etc. around the world.
ERP Failure in Levi Strauss: Levi Strauss implemented ERP system to manage their employees who are more than 10,000 in more than 110 countries, orders, and stocks, to reach more advance levels in the online shopping. Levi Strauss put a lot of money for installing and implementing ERP in the several parts of their organization. But the installation have not done efficiently, due to this Levi Strauss incurred a big loss because they are unable to ship the goods over weeks. This cause impacts on the overall business of the Levi Strauss such as they lost the customers, vendors and also the orders made for the cloths are cancelled.
• One should ensure that the existing system is thoroughly reviewed tested correctly effectively before the implementation phase has started.
• We all know that the installation of ERP or SAP are more expensive and it can be done by only certified, experienced people.
• One should make sure that the proposed or aim of the project is clearly defined and requirements are gathered perfectly.
Three Successful ERP Implementations:
1. LG Electronics: LG (Lucky Goldstar) Electronics is multi-national company across more than 40 countries in the world. Initially LG electronics is known as Goldstar, it is renamed as LG Electronics in the year 2002. LG Electronics operates in several domains such as home appliances, entertainment, mobile or telecommunication equipment, energy solutions, manufacturing and servicing air conditioners or coolers, etc.
Implementation of ERP in LG Electronics: LG Electronics have 114 clients or subsidiaries, more than 82,000 employees over 40 countries. One of the main goals of LG to implement ERP are providing efficient resource utilization, top level reporting, to manage HR functions in all of those, and also to efficient decision making, reduce maintenance costs, to provide transparency, etc. LG has started implementing the ERP system.
• LG Electronics have developed a central managed single system to optimize the cost of maintenance by implementing ERP system.
• Implemented transparency of the objectives and goals.
• Developed tracking system and possible options status finding for the higher authorities.
2. Nestle: Nestle is the largest food and beverage manufacture from Swiss international food which has its headquarters in Switzerland. Nestle manufactures several products such as chocolates, candies, coffee, dairy products, cereals, ice cream, frozen food, snacks, baby food and pet foods etc.
Implementation of ERP in Nestle: Nestle implemented the ERP system to extend the size of the organization, and make the standardized business process of the company to get stand in the market competition, controlling the supply chain management, providing efficient planning, effective procurement, and demand planning, organizing the business intelligence modules.
• Nestle designed an effective plan phases to implement the ERP system by keeping the scope and objective of the project very clear throughout the process.
• Achieved the success in implementing ERP by effective commitment and coordination between the employees and higher authorities.
• Included and divided the right and experienced people in the process from the starting position of the implementation.
• Forced and able to follow the specified or decided time scale or deadlines, and also focused on training the employees about the total process of the implementation.
3. FedEx Corporation: It is a company which provides courier and parcel delivery services across the globe and it was established in the year October, 1997. FedEx is well known for shipping, tracking the parcels, and provides up to date updates about the respected package or parcel service.
Implementation of ERP in FedEx: FedEx implemented ERP system to provide the integrated shipping and logistics. The main of the FedEx to use ERP is to provide efficient shipment or parcel tracking status, and make automated business process to move to the next step or process such as delivery details and status, also make an organized sequence of user or customer orders, arranging transportation and scheduling them, etc.
• In the implementation of ERP in FedEx, to integrate the shipping they have used SAP R/3 which provide real time and effective services for the total life cycle.
• They have well organized supply chain management system for the project.
• They have clear view about the process what they are doing and they implemented ideas effectively to get succeed in the implementation process.
• FedEx uses a single and unified process to ship the packages or shipments to ship both domestic and international.
Even though there are some failures in the implementation of Enterprise Resource Planning (ERP) system but there are more successful implementations. We can implement the ERP system successfully, if we follow the steps correctly right from the starting position of implementation known as planning to till the end of the process go-live or delivery of the service or release of the product. We need to take care and put concentration while we installing the ERP, because it is highly cost and if we don't install it correctly then it will effect on the total result of the project or implementation.
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