The document discusses the failed ERP implementation by Hershey's, called Enterprise 21. The $112 million project aimed to integrate SAP, Manugistics, and Seibel software by 1999 but faced major issues. Post-implementation, order fulfillment doubled to 15 days and inventories grew by 25% with a 0.5% loss in market share. Key failure factors included unrealistic timelines, inadequate testing and training, and attempting a "big bang" go-live for the entire system. Hershey's was able to recover by upgrading more gradually in parts with improved testing, training, and a new CIO. The case highlights lessons about properly scoping ERP projects and change management.
2. HERSHEY’ S : CASE STUDY:
Presented By:
1.Sadia Butt-355
2.Hafza Mateen-3100
3.Sabeena Irfan-364
4.Amina Khan-376
Institute of Quality and Technology Management
Punjab University
ERP Implementation FailureERP Implementation Failure
3. CONTENTS
Introduction to ERP:
History, Product Selection criteria
Steps to Implement ERP
Key Success Factors
Benefits of Implementation
Hershey’S– A Brief Overview
Business Case-Summary
Hershey's Enterprise 21 Project-
Overview
Pre-Implementation- Expectations
Post Implementation-Actual Scenario
What Went Wrong?/Failure FactorsFailure Factors
Bouncing Back
Lessons Learned
5. ENTERPRISE RESOURCE PLANNING
( ERP )
ERP systems are large computer systems that integrate
application programs in accounting ,sales & marketing,
inventory management, customer relationship management
(CRM ), manufacturing and the other functions in the firm.
This integration is accomplished through a database
shared by all the application programs.
10. CRITICAL SUCCESS FACTORS FOR ERP IMPLEMENTATION:
The firm & optimistic approach of the Management
- on adapting the ERP product driven methodologies
- on customization
- on monetary commitments
The dedicated Team
Good Training
Strict adherence to the Project schedules
Right technical infra-structure
Change Management
Data Accuracy
14. One of the leading chocolate manufacturer across
world- Its products are sold in about 60 countries
worldwide.
Founded in 1876 by Milton Hershey. It has
headquarters in Pennsylvania.
Revenues of nearly $5 billion and almost 13,000
employees worldwide.
Hershey's sales are roughly 80% chocolate and 20%
non-chocolate
Hershey’s Competitors include Mars, Nestle, Russell Stover,
Palmer and Nabisco
HERSHEY’S– A Brief Overview
15. BUSINESS CASE-SUMMARY
The company was running on “legacy systems”, needed modernization of
IT System to:
i. Solve Y2K Problem ii. Have better coordinated deliveries to retailers
To tackle these issues, Harshey’s management decided to replace
existing systems with modules from three (3) IT partners:
i. SAP's R/3 ERP software ii. Manugistics SCM software iii. Seibel's CRM software
so as to manage integration among these three systems.
Management decided to go with “Big Bang “approach instead of “phased
“approach.
During late 1996, the management of Hershey gave its approval to a project
named “Enterprise 21” to help business processes.
16. ““ENTERPRISE 21ENTERPRISE 21”PROJECT”PROJECT -OVERVIEW-OVERVIEW
• Overall Project Cost:
$112 million worth of combination of software for CRM, ERP
and forecasting.
• Implementation Time:
• Shift to the new system by the end of year 1999.
• The recommended implementation time for the project was 4
yrs. and Hershey demanded for 2.5 yrs.
• decided to go with “Big Bang” approach instead of “phased”
approach.
28. BOUNCING BACK:
Hershey learned from mistakes and Began work
on the upgrade to mySAP in July 2001.
Hershey Foods said it had completed an upgrade
to mySAP.com —in 11 months, 20% under budget
by taking these initiatives:
i. Rigorous software testing iv. Appointed a new CIO
ii. Adequate training to employees v. implementation in parts
iii.Redesigned the Entire Process instead of “Big Bang”
1960’s - Systems Just for Inventory Control
1970’s - MRP – Material Requirement Planning (Inventory with material planning & procurement)
1980’s - MRP II – Manufacturing Resources Planning (Extended MRP to shop floor & distribution Management.)
Mid 1990’s - ERP – Enterprise Resource Planning (Covering all the activities of an Enterprise)
2000 onwards – ERP II – Collaborative Commerce (Extending ERP to external business entities)
. Definition and Analysis
Hold discussions with various functional personnel to establish the actual number of systems operating at client site, what they are used for, why and how often
Produce the Project Scoping Document outlining current situation, proposed solution and budgeted time
Challenge : REQUISITE EXPERTISE - No two clients are the same
2. Design
Prepare various functional reports - specifies current scenario and wish list
Prepare Design document which specifies how the system is going to work
Prepare test scripts to be followed on system testing
Map out the interface paths to various modules
Challenge : INFORMATION SHARING - Availability of staff
3. Build
Configure system as per set up document specifications i.e. transfer conceptual model into reality
Test system to verify accuracy (preliminary tests)
Challenge : TECHNICAL ENVIRONMENT - System functionality
4. Transition
Train users on their specific areas
Assist in test data compilation and system testing by users
Finalise the Live system and captured opening balances
Challenge : USER RESISTANCE Understanding and acceptance
data preparation
5. Production
Official hand holding
Effectiveness assessment
Business and Technical Direction recommendations
The Y2K problem also known as Year 2000 problem or the millennium bug was a result of computer
program design, where the year in the 'date' field was stored in two digits. After December 31, 1999,
which was read as 99, the next year 2000 would be interpreteda s 1900,d ue to the last two digits 00. When
this happens in programs that make calculations based on dates, like calculating interest, accounting
systems, etc. wrong results would be given.
Legacy systems:
Older software systems that remain vital to an organisation
Software systems that are developed specially for an organisation have a long lifetime
Many software systems that are still in use were developed many years ago using technologies that are now obsolete
These systems are still business critical that is, they are essential for the normal functioning of the business
They have been given the name legacy systems
legacy system
Definition
Obsolete computer system that may still be in use because its data cannot be changed to newer or standard formats, or its application programs cannot be upgraded.
Read more: http://www.businessdictionary.com/definition/legacy-system.html#ixzz43fXWmHsN
Data migration is the process of transferring data between storage types, formats, or computer systems. It is a key consideration for any system implementation, upgrade, or consolidation.