KC FELICILDA

1.     1.  Conduct research on the Web Sites of either CIO Magazine or CFO Magazine for stories about ERP implementation successes and failures. Using specific examples, describe the reasons for the successes and failures. What conclusions can be reached?

ERP Systems are complex, and implementing one can be a difficult, time-consuming, and expensive project for a company.  The technology is tightly integrated and requires a commitment from all divisions and often a change in the way a company does business to make it work.  It can take years to complete and cost as much as $500 million for a large company.  Moreover, there is no guarantee of the outcome.

A notorious example of a failed ERP implementation is the Hershey Foods’ SAPAG’s R/3 implementation.  The company spent $112 million and 30 months on their ERP project.  When they went live in July 1999, the company experienced problems pushing orders through the system, resulting in shipping delays and deliveries of incomplete orders

Many reasons have been cited for the Hershey ERP failure.  One, the project was originally scheduled to take four years, but the company forced the implementation to go live in just 30 months.  Two, the company simultaneously implemented a customer-relations package and a logistics package, substantially increasing the overall complexity and employee learning curve.  Three, the company went live at their busiest time of the year, just before Halloween, and the resultant delays caused third quarter profits to fall by $151 million compared to the previous year

Conclusion:

There are as many reasons for successful ERP implementations as there are for failed projects.  However, success seems to often be measured by whether or not the project came in on time and under budget.  Whereas, fully utilizing the system to achieve improved business practices appears to be ignored.  Performance measures must be developed and standardized to give organizations a clearer picture of the benefits derived from Enterprise Resource Planning implementation.  Much has been written about and learned from some well-publicized successes and failures in ERP implementations.  Some of it has even been directly contradictory.  However, most agree on some basic rules:

·         Establish the business processes prior to selecting the software.

·         Staff the project team with members of the user community in addition to IT staff.

·         Develop an implementation plan and stick to it.

·         Train the users thoroughly on the process changes and flow of information in addition to the actual software.

·         The project doesn’t end with “go-live”, but must be continually monitored.