Case Study
From Rappler.com:
Jollibee #ChickenSad: A costly IT problem
Jollibee loss millions of pesos last year due to an IT problem that forced some of its store to close. Here are the possible causes of the problem and the lessons we can learn from it.
Calen Martin Legaspi
Published: Aug. 13, 2014
Last year, Jollibee Foods Corporation announced that a major IT system change it undertook was to blame for the lack of the popular “Chickenjoy” in some of its stores. The change affected the fastfood giant’s inventory and delivery system, forcing 72 of its stores to close.
The brand has taken a hit: aside from its loyal customers taking their disappointment to social media, Jollibee has lost 6% of its sales at least for the last 7 days of August due to the problem, using Jollibee’s 2013 revenue that amounts to Php. 92 million. This is on top of the Php. 500 million that the company supposedly shelled out for its new IT system.
ISSUES
1. System migration
Jollibee had been using a product from software company Oracle to manage its supply chain, which includes inventory, placing of orders and delivery of supplies to stores. Insiders say a dispute to Oracle prompted Jollibee to switch to its rival, SAP.
Now, supply-chain products aren’t out-of-the-box that you can just install and run. These need to be customized in order to fit a company’s business processes. The customization usually takes months, if not over a year, and involves programming and configuration. Jollibee outsourced this project to a large multinational IT service provider. Jollibee’s Oracle system had been running for about years, and most certainly, had huge amount of complex programming and continuous modification over time. There must have been fragile interrelationships between these programs and configurations, making the migration to SAP a huge and risky move.
2. Staffing and expertise
The migration project was outsourced to a large multinational IT service provider, with no sizable local team handling SAP,
Jollibee #ChickenSad: A costly IT problem
Jollibee loss millions of pesos last year due to an IT problem that forced some of its store to close. Here are the possible causes of the problem and the lessons we can learn from it.
Calen Martin Legaspi
Published: Aug. 13, 2014
Last year, Jollibee Foods Corporation announced that a major IT system change it undertook was to blame for the lack of the popular “Chickenjoy” in some of its stores. The change affected the fastfood giant’s inventory and delivery system, forcing 72 of its stores to close.
The brand has taken a hit: aside from its loyal customers taking their disappointment to social media, Jollibee has lost 6% of its sales at least for the last 7 days of August due to the problem, using Jollibee’s 2013 revenue that amounts to Php. 92 million. This is on top of the Php. 500 million that the company supposedly shelled out for its new IT system.
ISSUES
1. System migration
Jollibee had been using a product from software company Oracle to manage its supply chain, which includes inventory, placing of orders and delivery of supplies to stores. Insiders say a dispute to Oracle prompted Jollibee to switch to its rival, SAP.
Now, supply-chain products aren’t out-of-the-box that you can just install and run. These need to be customized in order to fit a company’s business processes. The customization usually takes months, if not over a year, and involves programming and configuration. Jollibee outsourced this project to a large multinational IT service provider. Jollibee’s Oracle system had been running for about years, and most certainly, had huge amount of complex programming and continuous modification over time. There must have been fragile interrelationships between these programs and configurations, making the migration to SAP a huge and risky move.
2. Staffing and expertise
The migration project was outsourced to a large multinational IT service provider, with no sizable local team handling SAP,