Erp failures case study

Yet how do you turn these huge - and often financially devastating - setbacks around and carry on? We look at three real-world examples. Nevertheless, after making fixing IT issues a priority. Something to take away: figure out if your issue is fixable before abandoning the project completely.

Sometimes soldiering through is your best bet. The school began work in to replace in-house systems that were twenty years old. It turned out that the new software was more sensitive than the old.

Despite initial teething issues, therefore, Indiana University stuck with PeopleSoft and eliminated these issues by revising and streamlining key processes. ScanSource is one of the largest providers of bar code scanners for the retail industry. They are based in South Carolina. So, what happened? On February 2,ScanSource began using the SAP ERP application in Europe to support its growing business, as the ERP system allows for the enhancement of business processes and creation of efficiencies to meet the needs of its operations globally.

With a new stable platform, ScanSource now runs more efficiently and effectively, making the company ready for future growth. Something to take away: know when enough is enough. And know when your vendor is breaking contractual obligations with regard to project cost and time inflation.

erp failures case study

Overall, good project management skills are critical in turning around ERP failure. ERP projects are expensive and take years to complete. Requirements will evolve and time and expenses must be managed carefully. When there is a mismatch, the project manager must quickly determine if the project will self-correct one extreme or should be abandoned another extreme.

Free white paper. Featured white papers. Sign up to our newsletter Sign up. Thank You! Your first ERP newsletter should arrive in your inbox soon.The goal of ERP is to simplify business strategies and ensure efficiency within a carefully defined information system environment however; ERP requires a lengthy timeline for optimal performance. This research paper examines the cause of events such as: the Y2K bug, and scheduling during the peak chocolate distribution seasons which lead up to the failure.

Furthermore this paper also evaluates the epistemological framework which most of the decisions leading to the ERP implementation was made. We identify an underlying conflict between the way the goals and methods employed in the implementation was understood by the client Hershey and the software developers SAP, Sibel and Manugistics. The set of assumptions about what constitutes valid knowledge in software development and implementation is almost always drawn from a positivist epistemology.

Although this model often fails to capture the complexity and multitude of perspectives that can be present within the institutional environment of a large corporation, the most common reason given for an ERP implementation failure is lack of an adequate time frame and knowledge.

We therefore hypothesize that the limitations imposed by a positivist epistemological viewpoint preclude the development of adequate dialogue between client and developer and can result in a persistent misalignment of project goals amongst stakeholders. In this paper we will examine the mistakes Hershey made during ERP implementation and prove the reasons behind these mistakes are natural consequences of the failure to recognize and reconcile differences generated by disparate theories of knowledge.

Findings in this paper may help other companies avoid this kind of failure in the long run. This has led to numerous improvements in efficiency and profitability in many companies. ERP has a modular structure which is appealing to many organizations since it is convenient to roll out each module one step at a time or various points in the future.

As organizations began to integrate ERP, implementation problems arise. This paper examines a case study of ERP failure at Hershey that was largely brought on by fears of how embedded microprocessors with limited date representation would handle the date change from the last day of the twentieth century to the first day of the twenty-first. Hershey believed the algorithms in its previous legacy system was setup based on the dates embedded in the software therefore, when the dates turn over to the new millennium the software would not work correctly.

Executives at Hershey felt that failure was inevitable, and because Y2K was close at hand, the executives thought there was no choice but to accelerate the implementation schedule. In doing so, key factors such as giving employees adequate time for training, revision of distribution centers and scheduling were ignored. Any of which may have led to failure on its own. The decision making process followed by Hershey is a type of hypothetico-deductive reasoning that has its foundation in the natural sciences: if state A leads to state B, and state B leads to state C, then, state A will lead to state C.

We find this type of reasoning within the positivist epistemology. Before going any further, there are few definitions which we must clarify. Firstly, knowledge refers to information that leads to understanding. Secondly, epistemology refers to our theory of knowledge in particular where we get our knowledge base, and within each epistemology certain assumptions must be made about what constitutes as valid knowledge.

For example, those who live within a religious epistemology believe they receive their knowledge from God while those with a positivist viewpoint believe that the only valid knowledge can be found from the objective phenomenon of the real world through observation and experiment. To adequately describe human interaction and intention, it is frequently necessary to rely on an interpretive epistemology.

We therefore, use this approach in this paper. As a principle, interpretive research seeks to develop the context surrounding the phenomenon under question to admit that there may be multiple perspectives and multiple meanings within that context.

The failure at Hershey has been attributed to a lack of proper knowledge, and analysts have developed the impression that failure could have been avoided by carefully giving time to roll out each software module. An alternative explanation is that the seemingly coherent and clearly stated goals of the EPR implementation meant different things to each stakeholder, because of contextual differences.

The audiences for this paper are people who read a lot about software failure and who are interested in seeing the reason for ERP failure from a different perspective other than the norm of positivism. In general, stories about software failure mix epistemological frameworks and we would like to make a clear distinction between the different types of valid knowledge and information. The structure is as follows; in the first section we will discuss the whole story in relation to the implementation process.

In the second section, we will explain how that mixes elements of interpretative and positivist research methods and why it is inappropriate.

erp failures case study

Finally in the conclusion we will say what lessons can be learned from this and why separating or defining our epistemological frameworks will help us in the future to understand how to design software systems. In many, if not all cases, the six-stage process requires an abundant amount of time to ensure efficiency.

Another reason for ERP development at Hershey was the impending Y2K bug problem, which was apart of its old legacy system. These two major problems were the catalysts that Hershey needed to revolutionize its business.Create an AI-powered research feed to stay up to date with new papers like this posted to ArXiv. Skip to search form Skip to main content You are currently offline.

Some features of the site may not work correctly. DOI: Abstract While it is true that successful implementation of an enterprise resource planning ERP system is a task of Herculean proportions, it is not impossible.

If your organization is to reap the benefits of ERP, it must first develop a plan for success. Alternate Sources. Save to Library. Create Alert. Launch Research Feed. Share This Paper.

Topics from this paper. Enterprise resource planning. Citations Publications citing this paper. The contribution of enterprise systems to core capabilities: the case of asset lifecycle management in the utilities sector Simon Woodworth Business Policy-driven digital infrastructure development in the U. Information systems project failure — analysis of causal links using interpretive structural modelling Dianne L.

RanaAntonis C. Simintiras Engineering References Publications referenced by this paper.

Enterprise Resource Planning Implementation Failure: A Case Study from Jordan

UmbleM. Umble Industrial Management, 44 1 Robinson Worthen CIO, 15 15 When Small Companies Implement. EshelmanP.To browse Academia. Skip to main content.

erp failures case study

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Erp Implementation Failure: A Case Study

It is an investment with certain benefits and certain risks for enterprises. It is a strategic and administrative decision, while its suc- cess is initially based on the selection of the appropriate tool and supplier, and subse- quently on the implementation of the work.

In the present paper, there is a brief presentation of the way in which these systems operate, as well as the success and failure factors. Finally, five well-known cases of failed implementation and applica- tion of ERP systems are presented.

Besides, an information system uses human and mate- rial resources, software and data resources, as well as networks, in order to execute introduction, processing, extraction, storage, and monitoring of activities. ERP systems are information systems that support an enterprise in managing and distributing its resources effectively and efficiently, responding to its needs for information processing.

According to Davenportit is the most important application of in- formation technology in the corporate sector for As Wallace and Kremzar note, an ERP is a total of administrative tools covering the whole spectrum of an enterprise. It balances out materials supply and demand, has the possibility of connecting clients and suppliers through a complete supply chain, provides standardised entrepreneurial procedures of decision-making, and top-quality interoperable completion between sales, marketing, stock manage- ment, transactions, economic aggregates, new-product development, and human re- sources.

This software acts as the backbone of the company as it collects data con- cerning the different departments, and transfers them to others that can use them effi- ciently. A normal ERP application consists of data bases, applications, interfaces, and specific tools. According to Kallivokas and Vozikisan ERP consists of 4 components: the users, the software, the entrepreneurial procedures, and the hard- ware, along with the operating system.

The first companies that came to the fore as producers of such software applications were big enterprises, such as Sap, Baan, Ora- cle, and J.

The life cycle of a system involves 3 stages: before implementation, during implementation, and after implementation Kallivokas and Vozikis, Enterprise Resource Planning ERP solutions are great, but successful implementation requires careful thought, consideration, and engagement from all stakeholders.

3 Biggest Failure Cases of ERP Implementation and How You Can Avoid the Same Mistakes

When the global giant LG Electronics — with subsidiariesand more than 82, employees across 40 countries — tried to harmonize its Human Resources HR functions, the challenges were of a similarly giant scale. High maintenance costslocal controls lacking transparencyinefficient decision-making, under-utilization of resources, manual processes, etc.

So it decided to take the ERP route. It offered large data hosting, seamless migration of old data, easy scalabilitymultiple modules addition as needed and centralized access and control. LG hired Oracle Consulting to build a single centralized system that integrates available Oracle HR modules for uniform use at global level, thereby replacing location-specific system dependency.

The ERP solution, which included a data mart, performance management system, staff portal and e-learning application, enabled the following benefits for LG:.

Top 10 ERP Failures of All Time - ERP Lawsuits - ERP Expert Witness

It was not a cakewalk, given the large and distributed scale of ERP system implementation. Spanned over five years in five planned phases with a clearly set objective, the ERP solution enabled LG to mitigate the challenges posed by vastly spread global centers, for its Human Resource Management System requirements. Today, LG continues to benefit with the automated ERP solution, and continues to enhance it further as needed.

Fuze Energy Drinks, going through a rapid growth path, found its existing systems obsolete to meet the growing business needs. Primary challenges were:. Fuze was looking for a cost-effective, easy-to-maintain solution, without getting into the hassles of computer maintenance. It offered automation for inventory managementproduction lines and real-time financial reporting with no on-site maintenance, allowing Fuze to concentrate on its core business, instead of adding overhead for computer system maintenance.

ERP systems are usually big-ticket projects with high costs and varying timeframes. Case studies of successful ERP implementations allow for the careful selection of vendors, systems and solutions; a clear understanding of existing gaps and objectives to be met; and sufficient and continuous engagement from the client with the vendor, as requirements keep changing dynamically over the implementation phase.

Simply leaving implementation to the vendor may not be the best idea. Working with the vendor in a partnering role produces the best results. Business Essentials. Company Profiles. Small Business. Your Money. Personal Finance. Your Practice. Popular Courses. Business Company Profiles. The challenges for LG included :. Location-specific multiple systems leading to unclear top-level reporting, lack of optimum resource utilization Location-specific processes lacking transparency and automation needs for a global reporting Disengaged employees, limited outlook, no room for information or best-practices sharing Limited localized resources for employee learning and training Difficulties with decision-making, with significant business impact.

Centrally managed single system with minimal maintenance costs Transparency in the recruitment and employee appraisal processes, which hiring, engaging and rewarding performance based on the right competencies and proven performance Real-time reporting for higher management and tracking of set goals and objectives Informed decision-making due to readily available real time reports Centralized control over HR processes, with flexibility for regions to implement localized changes Efficiency improvement for HR functions Cost savings Easy sharing of best practices across the various centers Easy-access, self-service function for employees Facilitated learning for common tasks through document sharing and online tutorials, resulting in time and cost savings Increased employee morale, productivity and engagement.

Management of rapidly growing stocks and inventory Planning and managing production matched to demand and supply Reporting needs for financial decision-making.Big-name ERP failure stories have been widely reported on, striking fear into the hearts of businesses looking to implement or upgrade an ERP system. However, the best thing about failure is the lesson that often comes from it—and there are a lot of things to be learned from some of the most talked-about ERP failure stories.

Read on for four of those stories—and how to avoid making those same mistakes. After rolling out the system for testing in Canada, the door-to-door makeup giant reported that the technology had provided extra work for its critical sales representatives, rather than easing their number of tasks as the technology had been designed to do. This then understandably discouraged the reps from utilizing the system in the regions in which Avon tested, and the makeup seller lost its reps in droves.

After they got word of the software's failure to perform adequately in Canada, Avon discontinued rollouts across other locations and called off any further work with the enterprise software.

Make sure your employees are properly trained and transitioned into the new software and that they want to use that system in the first place. As they attempted to transition a region into a simplified group of ERP applications, they found that communication between both teams and software broke down.

As multiple silos worked individually and legacy software systems lost data in the transition, increased demand put entirely too much pressure on the whole ordeal. WM struggled with the project so badly that they ended up in court, claiming they had been duped by the SAP sales team and a flashy demo that never ended up materializing. Not one to take the punches quietly, SAP counterclaimed that the project failure had been entirely due to WM and their inability to provide key information and delegate knowledgeable employees to the project.

The case was finally settled in Safe to say, the ERP system did not provide the improvements or time-saving benefits that were originally expected. Lesson Learned: Communication, communication, communication. It can be an incredibly smart decision to go with an outside partner for an ERP project, but you need to make sure that both parties know the project you are embarking on.

Make sure you grill your potential consultantsand that they are up to speed with your project and have the experience it will take to complete it successfully. Ask for references, get a timeline and make sure you have full confidence in your partners before you sign anything. It was announced in November that the U.

That project had been running for over seven years and had gone far over budget. As a result, the Air Force decided it would simply be better to call it quits before they invested that cash, as the previous investment had yielded very little system improvement.

Lesson Learned: Understand the size and scope of your project at the beginning, and set clear limits so that you know exactly when your ERP project is getting out of hand. Scope creep is one of the biggest hurdles an enterprise project has to overcome, so managing expectations for your ERP project among every employee and executive out of the gate is critical to project success. With clear goals and a realistic timeline and budget, you can ensure that you keep your software project out of the ERP failure stories pile.

ERP failures can result in millions of dollars down the drain, lost customers and even courtroom battles.This star rating of the post below was determined by two factors: how many times the post was read, and by how engaging the post was as measured 'by time on page' metrics from Google Analytics. ERP implementation is a quite an expensive and difficult process not only for small companies but for some multinational giants as well.

However, with full preparation and thorough research to manage expectations, a successful ERP implementation can be achieved. Below, we outline the 3 biggest failure cases of ERP implementation and offer tips on what you can do to avoid the same mistakes. To avoid the same mistake, be sure to set realistic goals for your ERP implementation process early on and ensure that you take enough time to test the system for any kinks that need to be ironed out before moving forward with implementation.

July of is a month which everybody in Hershey would rather want to forget because of the new ERP system launch that proved to be unsuccessful.

erp failures case study

For more tips and techniques on how to save your company from an ERP implementation disaster, download our free ERP whitepaper. Email Print. Hershey and a Halloween Disaster July of is a month which everybody in Hershey would rather want to forget because of the new ERP system launch that proved to be unsuccessful.

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