Remember the 1958 horror flick The Blob? It came to Earth and devoured people, houses and towns by enveloping them in its inexorable mass. Was this a foreshadowing of enterprise resource planning?
ERP I: School of Hard Knocks
Going back to school in the fall can be a scary thing for any student—especially college freshmen.
The last thing they need is some computer program to haunt their lives and make things even more uncertain.
But in 2004, more than 27,000 students at the University of Massachusetts, Stanford and Indiana University
were forced to do battle with buggy portals and ERP applications that left them at best unable to find their
classes and at worst unable to collect their financial aid checks.
“The freshmen were going crazy because they didn’t know where to go.” — Stefanie Fillers, former University of Massachusetts student
ERP II: The Pain Continues
Privacy scandal or ERP nightmare: Which did more damage to Hewlett-Packard? The verdict’s
still out. But HP’s 2004 ERP implementation was Murphy’s Law writ large—everything that could
have gone wrong, did. The project eventually cost HP $160 million in order backlogs and lost
revenue—more than five times the project’s estimated cost.
“We had a series of small problems, none of which individually would have been too much to handle. But together they created the perfect storm.”
— Gilles Bouchard, then-CIO and executive vice president of global operations, Hewlett-Packard
ERP III: Exercise in Agony
A $400 million investment in upgrading your supply chain systems should buy you a lot.
Back in 2000, what it bought Nike was $100 million in lost sales, a 20 percent stock dip
and an assortment of class-action lawsuits. These came thanks to a fumbled attempt to
integrate ERP, supply chain planning and CRM into a single superstar system. The setback
was a big black eye for one of the United States’ premier corporations that lives on as
a tale of woe and warning.
“For the people who follow this sort of thing, we became a poster child
[for failed implementations].” — Roland Wolfram, Nike’s vice president of global operations and technology
ERP IV: Sweet Misery
Spend a dollar to lose a dollar. What? That isn’t the way information systems are supposed to work.
But that was the early outcome of Hershey’s
1999 attempt to create a snazzy new order-taking and distribution system. Problem was, it didn’t
initially work—and it prevented Hershey from delivering $100 million in pre-Halloween toothrot.
The poor suckers also caught it in the kisser when investors bailed on the stock—to the tune of
an 8 percent drop—on the day former CEO Kenneth Wolf announced the system problem.
“There is no doubt that 1999 was a difficult and disappointing year for Hershey Foods as sales
and earnings fell significantly short of our, as well as the market’s, expectations…this was largely
the result of customer service and order fulfillment problems stemming from the July 1999 start-up of
the final phase of new business systems and processes in these areas.” — Kenneth L. Wolfe,
former chairman and chief executive officer, Hershey Foods, in a 1999 press release
ERP V: Sudden Death
The ultimate cautionary tale for any IT manager about to pull the trigger on a new ERP
implementation? FoxMeyer Drug. Following an SAP R/3 implementation in the mid- to late-1990s,
the company’s bankruptcy trustees filed a $500 million lawsuit
in 1998 against SAP, and another $500 million suit against co-implementer Andersen Consulting,
claiming the companies’ software and installation efforts had contributed to the drug company’s demise.
“On June 23, 2004, SAP reached a settlement agreement with FoxMeyer pursuant to which SAP was
required to pay a specified amount to FoxMeyer and to which all outstanding disputes and litigation
were dismissed by order of the United States Bankruptcy Court for the District of Delaware dated
August 30, 2004. SAP paid FoxMeyer the settlement amount on September 9, 2004.” — Quote from
2004 SAP annual report
“What did we miss? Nominate your own Worst IT Disaster by sending it to Chris Lindquist at CIO.com.”