Question

Using the internet, discuss at least two major ERP systems implementation failures involving some well known United States businesses and establishments. State the organizations involved, the vendor(s), the reason why the implementation failed, the economic costs of the implementation failure and what should have been done to avoid the failure.

Answer 1

As Hershey's slashed down its $112 million IT infrastructure, the worst-case possibilities for Hershey become true. Business operations and network failures triggered business chaos, resulting in a 19% decrease in quarterly earnings and an 8% decline in stock price.
Below are the important facts: Hershey's plans to update her patchwork of outdated IT programs to an automated ERP platform in 1996. It selected the R/3 ERP software for SAP, the software for supply chain management (SCM) for Manugistics and the software for customer relationship management (CRM) for Seibel. With a reasonable 48-month cycle period, Hershey's requested a 30-month turnaround, enabling it to carry out the programs until Y2K.

The cutover was scheduled for July 1999 based on certain scheduling demands. This go-live schedule coincided with Hershey's busy times – the time it will collect the majority of its orders for Halloween and Christmas. Hershey's development department needed to cut corners on stages of essential infrastructure-testing to satisfy the demanding schedule demands. In July 1999, as the systems went operational, unexpected problems stopped instructions from going into the networks. As a result, Hershey's was unable to accept Kiss and Jolly Rancher's orders worth $100 million, even though it had much of the stock in hand.

The design team at Hershey made the cardinal error of compromising research processes for the sake of ease. As a result, crucial problems related to records, procedures, and system integration could have remained undetected until too late.
Phases in research are safety nets that can never be jeopardized. If the checking pushes the start date back, so be it. The future benefits of skimping on trial schedules outweigh the risks of sticking to a longer timetable. Our company supports methodical models of actual working environments in spite of the required monitoring. The more the research conditions are plausible, the more likely it is that crucial problems will be found before cutover.
Hershey found another design mistake in the textbook-this time in regard to the pacing of the study. It first tried to compress a complicated project of integrating ERP into an unreasonably short timeframe. A sure-fire way to be trapped is to abandon due diligence for the sake of expediency.

Hershey's had another crucial timing error – during his busy season, she scheduled his cutover. It was unfair for Hershey to assume that if its workers had not yet been thoroughly educated on the latest processes and workflows, it would be able to satisfy peak demand. Regardless of the high learning curves, businesses will still assume efficiency reductions even in best-case implementation scenarios.

Hershey would have listened to the required time of 48 months for the implementation and should not have rushed for the implementation within 30 months. They should have implemented only after the proper testing was done but they avoid it as well.

The same mistake was made by Nike. Nike in 2000 and 2001, was paying $400 million to upgrade its supply chain network and ERP. They were shocked to see that what they got was a ghastly 20 percent dip in their stock, $100 million in missed revenue, and a host of litigation for a class action. What went wrong? They introduced and introduced a new demand-planning approach without adequate monitoring and it all went wrong. Rather than helping Adidas balance their stock with demand and shorten their manufacturing process, they ended up buying low-selling shoes instead of high-demand ones and crashed the supply chain.