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  • Published on: 14th September 2019
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ERP Implementation Success and Failures

Jeevan Gujjula

[email protected]

Introduction

Enterprise Resource Planning (ERP) implementation is significant factor to consider for organizations. Implementing ERP solutions is a challenging decision which has high risk of failure associated with affecting process and people. Though there are many ERP system implementation failures, there are many more success stories which doesn't make big sound. In this paper we will look at the success and failure stories of ERP implementations of few companies.

ERP Failures

However, it is interesting to focus on the causes for the failures of ERP implementations. Main issues concerned with an ERP implementation failure are people, process, change management and hardware. It is not the ERP software doesn't work, it is that the company fails to select the right system, install, manage and implement the system properly. Some of the ERP implementation failures in well known organizations are discussed briefly below.

The Hershey Company

The Hershey Company, the largest chocolate manufacturing company in North America which was established in 1894. It has sales of 80% chocolates and 20% confectionaries. The company faced a big failure in ERP system testing and scheduling in 1999. As a project manager, I chose Hershey's failure to share my opinion on how important is ERP system testing and project scheduling to reduce risk of failure and damage to a company.

Goals and its Failure story:

In 1996, The Hershey Company set to change its legacy IT systems with ERP environment by installing SAP's R/3 ERP software, Manugistic's SCM software and Seibel's CRM software. Instead of having a 48-month period of implementation schedule, the company demanded a turnaround of 30 months. During this live scheduling, Hershey's got its busiest period (bulk orders for Halloween and Christmas) coincided with this 30-month turnaround plan. To meet customer demands the company couldn't carry out an effecting testing phase. When the systems went live, unpredicted issues were seen preventing the orders flowing through the system. Consequently, Hershey's was unable to process the bulk orders received, though it has adequate inventory in the stock.

My Opinion and Learning:

In my opinion, the implementation team made a fundamental mistake of forfeiting systems testing and project timing for the sake of convenience. Consequently, the crucial data, process and integration issues may have remained unidentified before it was too late.

Instead of implementing a shortcut plan of 30-months, Hershey's would have improved the resource for testing phase d should have emphasized on system testing, data migration and source training.

I would have recruited experienced people in ERP and have trained them in business processes and cut down the incoming orders during the cutover period. So that, employees would also have more time to learn and correct the mistakes in the new business process and systems. Instead of big bang approach it should implemented a phase approach.

During the cutover time, they should have been attentive to the bulk incoming orders which cannot be processed and proper time for testing phase shouldn't have been allocated.

By this failure, most important lessons learnt are: testing the business process and ERP systems using a realistic plan of operating scenarios and more emphasize on ERP scheduling.

Waste Management Inc.

Waste Management Inc.(WM) is largest provider for integrated environmental services in North America. It was founded in 1971, and headquartered in Houston, Texas. It is a leading, owner and operator of landfill gas-to-energy (LFGTE) and waste-to-energy facilities in USA. WM main motto is to reduce unfavorable affects waste on living organisms and the environment.

Goals and its Failure story:

Vision of the company is to minimizing the environmental waste and maximizing the resource value like recycling etc. so as to develop economy and environment. Due to lack of senior management support and risk management the project was delayed with 14 months of implementation. Also inaccurate key decision and not providing timely information lead to its failure in reaching the goal.

My Opinion and Learning:

In my opinion, WM should have good management of supporting risk identification and risk mitigation issues. Rather than customizing the software according to the company needs, should have taken SAP team support.

As a project manager I would have suggested a good management with adequate knowledge and better implementation strategies of risk management so that reduce the risk of failure.

During the project forecasting they should have been attentive so that appropriate risk management steps can be taken so as to avoid such failures.

By this failure, most important lessons learnt are: organization should have control over the business process tool, strong leadership and management identifying risk factors.

Hewlett-Packard Inc.(HP)

The Hewlett-Packard(HP) Inc. is an American technology company headquartered in Palo Alto, California, USA. It provides hardware products, software, technologies, solutions and services to consumers. It was the leading producer of Personal computers in the world from 2007 to 2013.

Goals and its Failure story:

Company's goal was to benefit with a new business strategy with a motive of large volume and less price electronic market. They have implemented SAP ERP and later migrated to mySAP ERP. This migration resulted in decrease of their revenues. It was revealed that, HP was failed in executing the business process and not because of SAP ERP. HP also revealed that there was a mistake in addressing the emergency planning of the business process, besides having small technical defects. The financial deficit was up to $160 million.

My Opinion and Learning:

In my opinion the failure was mainly due to the migration of existing ERP to a centralized ERP in North America which brought down the company revenue drastically.

They should have been cautious to new implementation of ERP and have opinions of senior technicians so as to avoid such issues.

As a Project manager I would suggest taking employees suggestions and opinions, also management support has to be extended to employees for their opinions. Component testing of the project would clear off the mistakes occurred due to technical defects. Also there should be a comprehensive mapping between business requirements and the departments to meet the company objectives. Better planning of business process leads to success of the project implementation.

Successful Implementations of ERP

Though there are many ERP system implementation failures, there are many more success stories which doesn't make big sound. Below are the few success stories in the ERP implementation.

Bharat Petroleum Corp. Ltd

Bharat Petroleum(BP) is leading petroleum Co. in India which is 9.5-billion-dollar petroleum refining and marketing company. It is the first Indian oil refining company to implement SAP R/3. The company implements SAP solution manager so as to optimize SAP by using their tools and methodologies.

Goals and Its Success Story:

The company's goal is to deliver high-quality services and enhance the business process throughout the organization with the help of SAP solutions. It has established a competency center so as work as a back-end help desk. It has deployed the SAP R/3 cross industry solution which is the infrastructural heart to the SAP business suite.

It was very successful in implementing SAP solutions using SAP Solutions Manger, with help of enhanced user-knowledge and also effective participation of employees helped in increasing BP's competing edge.

My Opinion and Learning:

In my opinion, the have chosen the best ERP SAP R/3 an enterprise- wide resource panning solution so as to improve its services and optimize business process in the organization.

I have learnt that with help of enhanced user-knowledge and active participation of employees and also with the right implementation of ERP it has achieved a good competitive edge.

Nestle

Nestle is a food and beverage company established in 1866 and its headquarters are situated at Switzerland. It is ranked under 100 in Fortune 500 companies. It introduced famous noodle product Maggi in 1947. It was also in news for Maggi issue raised in may 2015. Nestle ha implemented SAP solutions for ERP implementation in the company.

Goals and Its Success story:

Nestlé's goal is to have long term profits and create trust among customers and people and ensures it achieves highest standards throughout the organization.

Nestle has delivered a superior business performance with nutrition enriched products and maintaining consumers' trust.

It was very successful as it has implemented BEST, briefly Business Excellence and System Technology. The new management replaced has worked effectively for best practices replacing the BEST with SAP Solutions.

My Opinion and Learning:

In my opinion, successful implementation of ERP solution is done with new team of higher management and set of business processes which made the ERP Successful.

Their mistake was to implement the ERP with an inappropriate management and then realized to change the management process business strategy. This realization of mistakes made the organization successful n implementing ERP.

LG Success Story

LG is a multi-national electronics company which produces Electronics, mobile devices and other appliances worldwide. It is headquartered in South Korea. It has a revenue of 143 billion-dollar in 2015. Besides this, it also produces laundry detergents etc. in the name of other child companies.

Goals and Its Success story:

LG goal was to improve an ERP solution to make the revenue cost effective and get in to the inconvenience of computer maintenance. It has many challenges with HR management issues where ineffective decisions were taken by higher management. It has implemented HRMS, Human Resource Management system which was developed by Oracle Inc. LG has familiarity with Oracle technology as t has used legacy Oracle Usage to make it easier.

My Opinion and Learning:

It was successful due to implementing a centralized system HRMS, to manage HR activities. It has been very transparent through entire ERP system in organization, with manual intervention of business processes.

Choosing Oracle as a ERP as their planning criteria for business process operations. Forecasting a vision and setting clear objectives led LG to achieve such a huge success by implementing HRMS.

Conclusion

Based on the research I have done in implementation failures and successful stories of various companies; I would like to conclude that every software needs to be upgraded/migrated from time to time. Also a good management is a crucial factor in implementing business process. The business strategies implemented in the companies should match with the business policies. A proper testing of the software should be done before it is going live in the project. We have to chose the right ERP which fits to our business process.

References

Wikipedia- Primary source for background of companies.

http://www.pemeco.com/wp-content/uploads/2013/09/Hershey_ERP_Case_Study.pdf

http://www.slideshare.net/TarvinderSingh5/case-study-on-erp-failures

https://en.wikipedia.org/wiki/Waste_Management_(corporation)

http://www.investopedia.com/articles/investing/111214/lg-case-study-successful-enterprise-resource-planning-system.asp

https://bharatpetroleum.com/bpclsaptc/pdf/CS_Bharat_Petroleum_support.pdf

http://www.uwosh.edu/faculty_staff/wresch/ERPNestle.htm

http://homes.ieu.edu.tr/nkutup/ise413/ERP+Implementation+failure+at+HP.pdf

http://astro.temple.edu/~wurban/Case%20Studies/HP's%20ERP%20Failure.pdf

https://en.wikipedia.org/wiki/Hewlett-Packard

https://en.wikipedia.org/wiki/HP_Inc.

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