When businesses decide to change from antiquated legacy systems to a modern, centralised ERP platform, the results are almost always positive. Unfortunately, an ERP implementation can also fail.
The company
The Hershey Company is a prominent confectionery company known for bringing delicious goodness to the world through its iconic snack brands.
With approximately 17,000 employees, the company has more than 90 brands around the world that drive more than $8 billion in annual revenues.
What happened?
Despite its success, Hershey faced challenges with its ERP implementation in 1999.
Given the impending Y2K crisis, the firm was keen to deploy its ERP solutions in time for the start of the new millennium.
They sought to deploy the ERP implementation in 30 months, rather than the recommended 48 months, and the results were nothing short of bewildering.
The organisation decided to replace its legacy IT systems with an integrated ERP environment. In all, the platform consisted of three main components:
- SAP R/3 ERP software
- Supply chain management (SCM) software
- Customer relationship management (CRM) software
They attempted to deploy all three technologies at the same time (bad idea!).
What followed was a mess of bickering among the company’s units. Various departments were in conflict with one another, resulting in failed systems testing, erroneous data migration, and flawed training.
The situation was so severe that Hershey failed to fulfil an estimated $100 million worth of orders even though they had the item in their inventory. This was a perfect example of business process and systems issues causing operational paralysis.
As a result, Hersey’s stock plummeted by 8% and its quarterly profits by 19%, and the undoing ended up on the front page of the Wall Street Journal.
Although Y2K is a relic of the past, Hershey’s experience is a cautionary tale for any business embarking on an ERP journey.
Lessons from Hershey’s ERP failure
- It is important to plan carefully and thoroughly when implementing an ERP system, especially if multiple components are involved.
- Do not try to deploy an ERP system in an unrealistic timeframe.
- Make sure all departments are on board with the implementation and that they have a clear understanding of their roles and responsibilities.
- It is important to test your systems thoroughly before going live and make sure all staff are properly trained.
- Always carefully assess the potential risks and impacts of an ERP implementation, both on your business operations and your bottom line.
- Phased implementation could curb implementation catastrophe.
- Timely and clear communication is essential to ERP success.
Don’t make the same mistakes!
If you are thinking of implementing an ERP system to help streamline your business processes, be sure to learn from the mistakes of the past and do your due diligence. This will help ensure a smooth, successful ERP implementation that delivers results for your organisation.
With careful planning, testing, and training, you can avoid an ERP implementation disaster and reap the many benefits of a centralised and integrated ERP platform.
Talk to us today to learn more about how we can help you with your ERP implementation needs.
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