To reduce risks, before deciding to purchase ERP, businesses need to pay most attention to the causes of ERP failure.
We briefly introduce typical projects of the world for very large enterprises, which may not be the same size as most Vietnamese companies, but it is a typical model for enterprises that, despite not lacking money, human resources, and material resources, choose the most expensive products such as SAP, but still fail and the price is often very expensive.
With our more than 20 years of experience, accurately planning your needs, budget, and human resources to find products for the next 5 to 10 years and avoiding the mistakes that large corporations make will bring effective success to your business.
"Success sometimes shows a path, but it is the failure of others that opens up countless valuable lessons to avoid going down the same path."
The Reasons for Hershey’s ERP Failure
Bigbang Metholody Implementing
- Year: 1999
- Cause of failure: Hershey implemented ERP during the peak season at the end of the year and tried to replace all three systems (ERP, CRM, SCM) at the same time. As a result, they could not process orders in time, causing serious delays in product distribution.
- Consequences: Hershey lost about $100 million in revenue and its stock price dropped significantly.
Reasons for Nike's ERP failure
Losing Control Due to Faulty Software
- Year: 2000
- Cause of failure: Nike invested in a $400 million ERP system combined with SCM (Supply Chain Management). However, errors in the software caused inventory to not be well controlled, leading to product shortages in some places and surpluses in others.
- Consequences: Nike lost $100 million and faced criticism from customers for not meeting product needs.
The Reasons for Levi Strauss & Co.'s ERP Failure
Lack of full impact assessment on processes
- Year: 2008
- Cause of failure: Levi Strauss implemented SAP's ERP system at a cost of about $5 million. They did not fully assess the impact of the new system on business processes and affected the supply chain.
- Consequences: Due to the unstable operation of the ERP system, Levi Strauss could not ship goods and serve customers on time, causing a large loss in revenue.
Reasons for Lidl's ERP failure
Required many modifications to the SAP system
- Year: 2018
- Cause of failure: Lidl invested in SAP's ERP system, but then requested customizations to suit its own processes, causing conflicts during the implementation process. Due to lack of flexibility, the system could not meet the requirements of the business
- Consequences: After spending $500 million, Lidl had to abandon this ERP project and return to using the old system
Reasons for Waste Management's ERP Failure
Not clearly defining requirements from the beginning
- Year: 2005
- Cause of failure: Waste Management signed a $100 million contract with SAP but did not clearly define the needs from the beginning, leading to inconsistencies during the implementation process.
- Consequences: The project did not bring the expected value and led to a lawsuit between the two parties. Waste Management sought nearly $500 million in compensation.
Reasons for HP's (Hewlett-Packard) ERP failure
System failure caused disruptions
- Year: 2004
- Cause of failure: HP implemented an ERP system to integrate and improve manufacturing and distribution processes. However, a failure in the ERP system disrupted operations and prevented goods from being shipped on time.
- Consequences: HP lost approximately $160 million in revenue and several major customers due to on-time delivery
Lessons learned from the above failures:
Changing many systems and processes at the same time can lead to risks
Before implementing, it is necessary to understand whether the ERP system meets the requirements and processes of the business.
Avoid implementing at sensitive times, need a roadmap and backup procedures in case of problems
Ensure all stakeholders are fully informed and trained about changes in the system
Refer to more detailed articles
ERP News
Information about the management system
Learn carefully about software companies, implementation steps and what to prepare before deciding to deploy an ERP software system for your business.
