The Cloud Brings Fewer Colossal ERP Fails: Part 1

Every few months or so we see an article describing some of the past colossal ERP failures. On December 17, 2014, Inside-ERP published a blog by Jerri Ledford refreshing our memories of a few that made the news and B-School case studies. In the article, Ledford mentions some of the classic examples including Avon, Bridgestone, Hershey, Nike and, of course, the U.S. Air Force.

It will be debated for years who was responsible for each of these failures. Depending on who does the analysis, the finger might be pointed at the customer, the system integrator, the infrastructure provider or the ERP software company. However, there are some striking similarities that may be instructive in avoiding future ERP implementation catastrophes.

  • They were all mega projects requiring multi-million dollar investments. Nike invested $400 million while the Air Force poured in over $1.1 billion.
  • They all required multi-year implementations. The vendors in the Hershey case specified a 48-month implementation schedule. Hershey demanded and received a 30-month schedule. The Air Force was at their implementation for over eight years.
  • Most of the implementations were that team's first major attempt in creating a company wide integration of the key systems required to run the business. They were moving from a collection of homegrown systems that were being supplemented by some first generation enterprise applications. Their vision, and hope, for the new system was the result of years of difficult times making changes to the homegrown applications and keeping all the moving pieces synchronized. That frustration with their existing systems, and promise of a single integrated environment, lead them to accept massive projects of replacement.
  • Perhaps the most notable similarity between the projects was they were all traditional software deployed on traditional hardware platform. Today, we call them legacy systems.
  • In addition to the complexity of the software, they had to contend with parallel projects related to the infrastructure. Many had to upgrade servers, databases, networks and desktops as well as the operating systems that supported the platforms.
  • The size of the projects required hundreds, if not thousands, of system integrators working on the task. Most of those folks were working for a third party systems integration firm.

Stay tuned for part two to learn why we can expect fewer colossal ERP fails in the future...

ABOUT THE AUTHOR: T. Lee Wylie is Chairman of the Rootstock Executive Council. As Director of CIM at Gartner Group, Wylie created the concept of ERP to describe the evolution of MRP into next generation business systems. While CIO for Gartner Group, he directed the development and implementation of new information technology systems to satisfy the needs of a rapidly growing firm.

Prior to Gartner Group, Wylie was the executive responsible for GM’s Saturn manufacturing systems. He directed the design and development of the corporate strategy for a clean sheet approach to plant floor manufacturing systems for a new 6.9 million square foot, 2100 acre complex. Previously at IBM, Wylie directed the engineering activities relating to IBM facilities, production systems, manufacturing cost estimates and industrial engineering for all IBM robot and industrial computer products.

Wylie holds a BSIE in Industrial Engineering from Pennsylvania State University and an MBA in Marketing and Finance from the University of Detroit.