Failed ERP Could Leave You Needing a Lawyer

by Ankit Kumar
4 months ago

There can be a long & never ending debate, whether the technology should work for the human or the human should work according to the technology. But in the case of an ERP system, It is the nervous system of the organization. Imagine a system processing the vital operations such as sales-to-cash, accounting, reporting, compliance, human resources, supply chain, customer, and sales in parallel, goes down at any level. Despite the criticality, An ERP system can be a nightmare for 10 reasons.

  1. Lack of Top Management Support.
  2. Part-time project management by the managers.
  3. Improper Planning & Budget for the system.
  4. Under-estimating resources required & over reliance on the consultants.
  5. Inappropriate ERP System chosen while implementing the system.
  6. Insufficient Testing by the developers, testers or the end-users.
  7. Too much of customization rather that following the best practices and standardization of the ERP system.

Highlighting below are some epic ERP disasters, which took place because of the negligence of at least one or more of the reasons stated above.

  1. Vodafone: The improper migration ran into mismatch of the customer accounts, As the result, of improper testing, the customer began to notice the improper credits of the payments made. The company had to pay a fine of  £4.7 Million for the misconduct.
  2. Washington Community College systems: Due to an internal delay, The project went limping for long, and as the result, 34 campuses which were to go live with standardization, lost its track. Due another crisis, the third party implementing company went bankrupt, while HTC canceled the $13 million project on school system contract blaming the college for  “internal dysfunction”.
  3. Woolworth Supermarkets, Australia: The problem arose due to the change in data collection procedures, the root cause was a failure of the business to fully understand its own processes, which were not properly documented and all the implementing stakeholders had left the organization.
  4. Target Canada: The company’s supply chain collapsed because the items were tagged with incorrect dimensions, prices, manufacturers. Thousands of entries were manually fed by in-experienced employees. 30 percent of the system information were incorrect.
  5. PG&E: Live production data was exposed to the third-party vendor as “demo” database for testing. This resulted in the failure to supply the protection required to the real production data.
  6. Hershey’s: The company was knocked down from the Fortune 500, due to the failed implementation, it could not deliver $100 million sales, caused the stock to dip 8 percent.
  7. Nike: The ERP – supply chain system made the loss of $100 million sales making the stock dip by 20 percent and a collection of class-action lawsuits.
  8. HP:  Due to improper planning, and despite knowing all the problems that could go wrong with the ERP system role out, $160 Million orders backlogged and resulted in the revenue loss. The Manager did not expect all the problems he knew would happen at once.
  9. Avon: The company had to ask their employees to leave the organization due the lack of proper planning, while a proper training could have helped the situation.


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