Reference no: EM131414130

QUESTION 1

Top Six ERP Implementation Failures

Posted by Melissa Monahan

Enterprise Resource Planning (ERP) implementations should smoothly integrate both internal and external information management across the organization that implements them, and yet many organizations that utilize ERP end up running into failure. It is believed that as many as 29 percent of all ERP implementations end up failing, and there are some well-known examples in the news that reinforce this belief. Here is a look at some of the top ERP implementation failure incidents that have occurred recently.

• Hershey's Blunder

Perhaps one of the best known ERP implementation failure incidents hitting the news occurred during the Halloween season in 1999. Due to mishap after mishap involving the company's SAP ERP, CRM, and supply chain applications, the company failed to deliver $100 million dollars' worth of Hershey Kisses during the season, which resulted in a startling 8 percent stock dip.

• Nike's Supply Chain Issues

Back in 2000 and 2001, Nike spent $400 million dollars updating their supply chain system and ERP implementation. They were surprised to find that what it got them was a ghastly 20 percent dip in their stock, $100 million dollars in lost revenues and a myriad of class action lawsuits. Where did they go wrong? They implemented a new demand-planning software solution without testing it, and everything went awry. Rather than helping Nike match their supply with demand, narrowing their sneaker manufacturing cycle, they ended up ordering low-selling sneakers in place of high demand ones, collapsing the supply chain.

• Hewlett Packard's Disaster

While it is not uncommon for small disasters or issues to occur during the rollout of a new ERP system, total ERP implementation failure can occur when too many of these little issues occur all at once. Moving all of the company's North American divisions into a single centralized ERP system ended up costing the company $160 million dollars in backlogged orders and lost revenues, more than five times what the project was estimated to cost in 2004.

• Waste Management's Trashed System

Waste Management began an 18-month installation process in 2005 that turned into a $100 million dollar legal battle which has been going on since 2008. Waste Management filed suit against SAP executives who apparently participated in fraud leading to a massive ERP implementation failure.

• FoxMeyer Drugs' Bankruptcy

FoxMeyer Drugs, a $5 billion dollar company implemented a $100 million dollar ERP system and went completely bankrupt not long after. Did the two have a correlation? They launched the Delta III project in 1993, and implementation began between 1994 and 1995. By 1996, FoxMeyer had been driven into bankruptcy, and by 1997 the pharmaceuticals company was suing SAP, the ERP project vendor as well as Andersen Consulting, responsible for integrating the system for $500 million dollars apiece.

• The Navy's $1 Billion Dollar Blunder

Perhaps most startling, the United States Navy has sunk $1 billion dollars into four different ERP pilot projects since 1998, and all four have failed. These projects were based on SAP AG software. All four installations turned out to be incompatible and redundant, ultimately failing to meet the requirements of the Navy. While in this case, the only cost was the money spent on purchasing the programs, this is an ERP implementation failure of epic proportions.

Learn From the Past Mistakes of Others

These are just a few of the serious ERP implementation failure occurrences that have happened over the past few decades. Businesses and organizations must look upon these examples, and use everything these companies and organizations learned through experimentation and failure to rise above and find greater success with an ERP implementation. ERP implementations can be successful without failure, but only when the right system is implemented by the right people to do the job.

References

Krigsman, M. (2010, February 3). ERP failure: New research and statistics. ZDNet. Retrieved April 15, 2014, fromhttps://www.zdnet.com/blog/projectfailures/erp-failure-new-research-and-statistics/8253

QUESTION 2

Question 2: Web search please!

Visit the website https://www.diversityinc.com and find their latest "top 50 list." What criteria are used to evaluate companies that appear on this list? What are the top five companies for the current year? Develop a brief commentary about the site. What do you think about the articles available here?