ERP Implementations and Failures-Case Studies

ERP implementations are often two to 10 times bigger than previous projects. Second, they are transformational, which means there are winners and losers in the organization as a result of the digital transformation enabled by the implementation. Third, they are generational, which means an organization might not have done anything comparable in 10 to 15 years.

Here are a few examples of actual cases and their takeaways.

1-Waste Managements failure to verify vendor claims

Waste Management ran into some major snags when it attempted a massive SAP installation in 2005. After numerous problems and delays, the company ended up in a $500 million lawsuit against SAP that was eventually settled out of court. SAP had suggested Waste Management could achieve $106 million to $220 million in annual benefits from a consolidated ERP system that could be implemented in 18 months. One big problem was Waste Management's failure to verify SAP's claims before making an executive decision. The company quickly discovered there were significant gaps between?what was promised and what was delivered in the software.

The Takeaway-Verify vendor claims with internal business and technical teams. Performing a proof of concept on critical functionality can reduce significant risk.

2-Nikes unrealistic goals

Nike thought it could Just Do It when it embarked on a $400 million? upgrade of its ERP system?in 2000. But the new system resulted in $100 million in lost sales and a 20% drop in stock price when it couldn't fulfill orders for Air Jordan footwear. Nike was overly optimistic in their goals, and they failed to verify business process met operational needs before deploying the system.

The Takeaway-It's important to set realistic goals in the implementation plan, especially with regard to ERP functionality and project schedules. Also defining operational and business requirements early on and keeping them in mind when developing systems. Ensure you take enough time to test the system for any kinks that need to be ironed out before putting your system into production.

3-MillerCoors hiring the wrong people for the job

MillerCoors embarked on an ambitious plan to consolidate all of its financials on a single ERP system to reduce costs and improve operational efficiency. In 2014, it hired HCL Technologies to implement the project, which was stalled by numerous defects. MillerCoors ended up suing HCL for $100 million, which was finally resolved in 2018.The problem arose because the planning and architectural phases were not given adequate consideration. In addition, many critical defects and other additional problems were identified but not fixed.

HCL's core competency was generally regarded as implementation, not planning and architecture.

The Takeaway-? Ensure you have the right expertise?for the particular project. IT is often the toughest and the most expensive part of integrating multiple companies, and they rushed through the planning and architecture phase only to get hurt by it later.

4-Revlons underestimation of operational impact

Revlon attempted to integrate all of its ERP processes across business units after a merger with Elizabeth Arden in 2016. The new system failed spectacularly after it went live in 2018, resulting in a loss of $64 million in sales, a 6.4% loss in stock price and? an investor lawsuit.

A key issue was that Revlon had attempted to consolidate Microsoft and Oracle systems on a new SAP implementation but lacked hands-on experience with SAP. It also decided to go live without making sure the ERP business processes would work as intended.

The Takeaway-Rolling out a system that does not meet operational needs and requirements often leads to adverse business impacts. Mind both the operational and business sides of an ERP implementation.

5- Invacares ERP solution gets Expensive

Medical device manufacturer Invacare's ERP project faced a key setback in rolling out a major SAP upgrade in 2021. Unfortunately, the company had to pay a monthly maintenance fee to the system integrator as the project dragged on into 2022, and the fed-up board went shopping for a new CEO in August 2022.

ERP implementations are one of the most resource-intensive projects a company can pursue; budget and timeline mismanagement can derail an ERP project or stop it altogether.

The software and support vendors a company chooses can make all the difference. It is important to? conduct an RFP process?that includes a comparative bid analysis, vendor demos and a scorecard filled in by key stakeholders.

Final takeaway:?It is important to accurately estimate the total cost of ownership, have a timeline that considers all services and partners, and develop a plan to avoid cost overruns due to change orders or delays.

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