Enterprise Resource Planning (Erp) Failure
In the years following the formal introduction Enterprise Resource Planning (ERP) systems in the early 1990s, there have been few ERP implementations that have been managed successfully, including those introduced by large corporations. Although much capital is usually put into ERP implementation, lack of key business practices has prevented extensive success. This paper reviews failed ERP implementations in three large organizations. It analyzes the reasons for the failures as well as the lessons to be learned so other organizations can avoid similar scenarios. ERP Implementation Failures
A Review of Three High-Profile ERP Implementation Failures
In August 2004, US-based HP, a top computer hardware and information technology company, announced that revenues from its Enterprise Servers and Storage (ESS) segment for the third quarter had declined by 5% to $3.4 billion compared to the previous year. HP indicated that the decline was mainly attributed to challenges faced in migrating to a centralized ERP system at one of its major divisions in North America. Between backlogs and overall lost revenue, the company estimated its financial impact to be $160 million, which by the way was five times more than the cost of implementing the ERP system (ERP Implementation Failure at HP). Given its role as consultant to many organizations using SAP solutions, it was imperative that HP perform its own ERP implementation almost flawlessly. However, upon announcement of the failed implementation, industry analysts raised questions about HP 's credibility as a consultant for SAP ERP systems, given the belief that they were experts at preventing the type of implementation problems they encountered (ERP Implementation Failure at HP).
The Hershey Company suffered a similar outcome in 1999. Their $112-million IT spend beginning in 1996 was geared at facilitating an upgrade of its patchwork of legacy IT systems into an integrated ERP environment. The recommended implementation
A Review of Three High-Profile ERP Implementation Failures
In August 2004, US-based HP, a top computer hardware and information technology company, announced that revenues from its Enterprise Servers and Storage (ESS) segment for the third quarter had declined by 5% to $3.4 billion compared to the previous year. HP indicated that the decline was mainly attributed to challenges faced in migrating to a centralized ERP system at one of its major divisions in North America. Between backlogs and overall lost revenue, the company estimated its financial impact to be $160 million, which by the way was five times more than the cost of implementing the ERP system (ERP Implementation Failure at HP). Given its role as consultant to many organizations using SAP solutions, it was imperative that HP perform its own ERP implementation almost flawlessly. However, upon announcement of the failed implementation, industry analysts raised questions about HP 's credibility as a consultant for SAP ERP systems, given the belief that they were experts at preventing the type of implementation problems they encountered (ERP Implementation Failure at HP).
The Hershey Company suffered a similar outcome in 1999. Their $112-million IT spend beginning in 1996 was geared at facilitating an upgrade of its patchwork of legacy IT systems into an integrated ERP environment. The recommended implementation
References: 10 reasons for ERP Implementation Failures. (2013, April 24). Retrieved May 30, 2013, from Open ERP Implementations: http://blogs.bistasolutions.com/2013/04/24/10-reasons-for-erp-implementations-failures/ Charette, R. N. (2012, November 15). U.S. Air Force Blows $1 Billion on Failed ERP Project. Retrieved May 30, 2013, from IEEE Spectrum: http://spectrum.ieee.org/riskfactor/aerospace/military/us-air-force-blows-1-billion-on-failed-erp-project ERP Implementation Failure at HP. (n.d.). Retrieved May 30, 2013, from IBS Center for Management Research: http://www.icmrindia.org/casestudies/catalogue/IT%20and%20Systems/ERP%20Implementation%20Failure%20at%20HP.htm Gross, J. (2011, March 9). A Case Study on Hershey 's ERP Implementation Failure: The Importance of Testing and Scheduling. Retrieved May 30, 2013, from Pemeco: http://www.pemeco.com/resources_center/erp-implementation-importance-testing-and-scheduling Ketrick, P. K., Bailey, J. W., Cunningham, M. O., Odell, L. A., Douglas, G. R., Floyd, D. M., et al. (2011, February). Assessment of DoD Enterprise Resource Planning Business Systems. Retrieved May 30, 2013, from Institute for Defense Analyses: http://www.dtic.mil/cgi-bin/GetTRDoc?Location=U2&doc=GetTRDoc.pdf&AD=ADA563798