John P. Bilbrey
Michele G. Buck
1999 ERP Implementation Failure
Since the ERP implementation failure in 1999 there have been many things blamed as causes. Instead of focusing on the implementation issues, this memo will focus on the choices made on the assessment and vendor selection process and how the failure could have been mitigated. Understanding these issues will help us avoid failure in the future and assist with successful product management.
Hershey differentiated themselves by pricing the products low which means that large quantities need to be sold. In order to make that possible, Hershey needed a top notch logistic and supply change systems as well as prepare for Y2K in a project labeled Enterprise 21. As part of that project in 1996, Hershey’s decided to upgrade its patchwork of legacy IT systems into an integrated ERP environment. Hershey’s chose SAP’s R/3 ERP software, Manugistic for supply chain management (SCM) software, and Seibel for customer relationship management software.
Hershey’s decided to implement new software so that they could share product data with retailers. They went with SAP for the ERP and Siebel and Manugistic for the other portions because they were all considered some of the best in their areas. Manugistic had been used previously with the existing mainframes so that prior relationship probably entered into the decision making.
The decision was made at the initial timeline of the project that this would be a 30 month timeline even though the average and suggested time for the project would be four years. Although that shorter timeline was caused by the impending Y2K software issue, it set the stage for more faulty decisions. This condensed timeline caused Hershey’s to not take time to fully assess the systems as well as leading to poor choices on testing and go live.
From an operational standpoint, the seasonality of Hershey’s business presented a challenge. The already condensed timeline also should have better taken the busy season for ordering for Halloween, Christmas, and Easter into account. By not allocating enough resources and allowing time from the start there wasn’t enough time to de-bug prior to the busy season.
The fact that Hershey’s themselves didn’t know what they required also caused issues. For example, the project team didn’t