How to Prevent ERP Failure
In one of our most popular blog posts, we shared infamous ERP disasters and explained where these projects went wrong. Since the post was originally published a few years back, a lot has changed. More and more ERP implementations are ending in success. Panorama’s most recent ERP Report found that 88% of businesses successfully implemented their software. As ERP solutions become more streamlined, manufacturers and distributors enjoy easier implementations and greater benefits.
Though failure rates are on the decline, businesses can still learn a lot from ERP disasters. Unsuccessful projects remind us that best practices must be followed to avoid budget overruns, delays and other critical issues. We’re exploring a few high-profile ERP failures and finding out where they went wrong, so you can prevent disaster in your next software project.
It’s hard to imagine a Halloween without classic Hershey’s candy, but a botched ERP implementation prevented $100 million worth of Kisses from making it into stores in October of 1999. The corporation underwent a massive overhaul of their legacy software, replacing their outdated systems with SAP ERP as well as CRM and supply chain applications. Desperate to complete the project before the turn of the century, Hershey rushed through the project and deployed their solutions in the summer of 1999.
Unfortunately, the business wasn’t equipped to handle such an abrupt cutover. Hershey had difficulty processing orders for the upcoming holiday season, resulting in a $150 million loss in revenue and a dip in the stock market.
Lesson Learned: Timing is everything, and Hershey made mistakes in pretty much every aspect of scheduling. We all want to complete our IT projects rapidly, but to execute a project of this magnitude, you must take your time to ensure everything is right. It’s also advisable to take a phased approach, implementing one system at a time rather than deploy multiple applications in one go. Furthermore, you never want to schedule your go live during peak seasons. By taking a rushed approach to their implementation and scheduling the cutover during a busy period, Hershey wasn’t able to provide adequate training and preparation to end users, resulting in a major setback for the business.
Pacific Gas & Electric
It’s been a rough year for PG&E, a San Francisco energy utility company. It filed for bankruptcy early this year after its equipment caused wildfires. Recently, PG&E gained more negative press after cutting the power to over two million California residents. The company’s faulty Oracle ERP implementation didn’t help PG&E avoid liabilities.
Though the project appeared to go well, a publicly exposed database was discovered in 2016. Data for over 47,000 PG&E computers and devices were completely open for viewing without any username or password protection. The catastrophe originated when a third-party vendor was given access to a live information database to use for testing. This debacle hurt the organization’s reputation and required them to purchase expensive recovery programs.
Lesson Learned: Security is a key priority of any software project. Select a solution that includes the features you need to protect sensitive data from unauthorized users, and ensure data is being utilized appropriately both during and after your ERP implementation. Additionally, be careful when putting together your project team. Testing is an important, technical process that shouldn’t be performed by just anyone. If you don’t have technical experts in your business, seek out certified consultants.
Nestlé’s SAP ERP implementation suffered from major roadblocks and upsets that could’ve easily been prevented. Like Hershey, Nestlé was in a hurry to complete their massive, global implementation before Y2K. When the solution was deployed in late 1999, chaos ensued.
Employees weren’t ready to change the technology and processes they had adhered to for years. None of the groups that were most affected by the implementation were represented on the stakeholders team, meaning that the concerns of primary end users weren’t addressed. Angry users flooded the help desk with 300 calls a day. Frustrated with the new ERP software and unsure how to follow redesigned processes, workers fled from Nestlé.
Lesson Learned: One of the most common mistakes of ERP implementation projects is poor change management. No matter how good your software is, it doesn’t provide any value if it isn’t used appropriately. If Nestlé had offered role-based training, clearly communicated with workers and incorporated user feedback into the project, their employees would have been well prepared for the ERP solution and more likely to embrace changes.
The vast majority of ERP implementation failures can be attributed to ignoring best practices. If you don’t design a realistic schedule, testing plan and change management strategy, you’ll experience costly errors that hurt your business performance.
But if you start your project by selecting a strong ERP solution and teaming up with a leading consulting firm, you’re well on your way to implementation success. Epicor is a leading ERP solution for manufacturers and distributors, offering comprehensive modules and end-to-end visibility to drive business growth. An Epicor Gold Partner, Datix has been a trusted consulting firm for over 20 years. From start to finish, our certified ERP experts follow best practices to implement solutions that meet each client’s unique needs.
Make sure your ERP project doesn’t become another failure story. For a successful software implementation, reach out to Datix today!