For an inexperienced IT department, taking over ERP vendor screening and ERP software solutions implementation will typically be costly, time-consuming and highlights complicated problems.
For any modern business, getting your ERP solutions implementation right first time is an absolute necessity. If all goes well then you have got a solution which will improve productivity, increase employees efficiency, scale back costs, increase sales and supply your customers with current data and services. If all goes wrong… well, let’s take a glance at some in renowned cases of ERP solutions errors…
Sweet gone bitter
Back in 1999, Hershey’s Foods, a popular US sweet manufacturer, switched to an SAP ERP solution for their North American office. Sadly for Hershey’s they were inexperienced in ERP solutions implementation nonetheless had tried to go directly through the vendor. Unprepared for the adjustment period following the $112m ERP solution and CRM package implementation, they suddenly suffered a mysterious drawback with their wholesale and distribution ordering system. The result: Hershey’s were unable to deliver some key sweet lines to retailers in time for Halloween, a crucial date within the American confectionery calendar. the cost to the corporation was $100m in lost revenue and an 8% drop in stock price.
How to avoid an identical mistake:
Get some expertise on your side. A seasoned IT team, well versed within the best practices of ERP solution implementation would have accounted for a few teething problems and ensured that the system wasn’t rolled out before it had been ready and in any event not right before the most vital festive date in Hershey’s commercial calendar.
If you don’t have the expertise in-house then make certain you decide on an ERP supplier with the expertise and support team to manage these avertable pitfalls.
‘Just do it’ – not always the most effective recommendation
A year later and at the turn of the millennium, international sportswear company Nike shelled-out over $400m for a replacement ERP solutions system. What did this vast amount of cash get Nike? A total of $100m in lost sales, a 20% drop in share value and class action lawsuits coming out of their ears. Well what went wrong?
Combining an ERP module with CRM and supply chain management software system, Nike had tried to make a better breed of super-system. These multiple-vendor business systems are widespread within the US however (perhaps due to the Nike multiple vendor ERP example) haven’t really caught on within the United Kingdom yet. On such an enormous scale, and as we see within the case of Nike, it only takes one key call to go awry for the entire project to travel downhill very fast.
How to avoid identical mistakes:
Consider very carefully the pros and cons of choosing one integrated ERP solution vs a best of breed approach. It is perhaps worth foregoing some advanced options that add negligible business worth to make sure that you simply are operating closely and effectively with one trustworthy software system provider.
“just doing it’ with a group of so called best of breed software system suppliers isn’t the most effective approach. ‘ There was clear evidence of an absence of planning and testing within the Nike implementation thus make certain that there is real focus and time allowed for these key activities.
“For people who follow these things, we became a poster child for failed implementations.”- Quote from Nike’s vice president of global operations and technology Roland wolfram,
The perfect storm
Sometimes it’s not just one factor that causes issues, it’s numerous little things. when Hewlett Packard implemented a replacement ERP software solution in 2004, in contrast to Hershey’s, they had left teething time, and, in contrast to Nike, had planned the implementation to the nth degree. Instead, what hit HP was the perfect storm of issues: a fifth of orders not going through, a resultant server bottleneck occurred, and also a backlog of orders to be processed.
The company lost a whopping $160m in lost revenues and seriously damaged their name. Customers and company purchasers alike began to move to competitors.
“We had a series of tiny issues, none of which individually would have been too much to handle. But all together they created the perfect storm.”- Quote from the executive vice president of worldwide operations and CIO for Hewlett-Packard at the time, Gilles Bouchard.
How to avoid an identical mistake:
How are you able to avoid the same tornado of issues? The HP ERP disaster fell to poor software system testing and additionally their aftercare team not being ready to tackle multiple problems at once. Some could even argue that they clearly selected the wrong vendor given the quantity of issues that seemed built into their ERP system.
When selecting an ERP software system provider, make certain they have a good track record both at building the initial system and handling the post-implementation care. An ERP supplier who isn’t equipped to manage issues of their own creating can leave the door wide open to a perfect storm of issues.