This talk investigates the failure of ERP implementation at Hershey Foods Corporation. See what went wrong, cost of failure ($150M loss), and top lessons in project management, IT planning, and enterprise software deployments. This case study is a must read for business executives, IT professionals, and students of ERP systems.

1. ERP Implementation
Failure at Hershey Foods
Corporation
Diya Jain

2. Background
Hershey Foods Corporation ERP Sysytem
• Leading U.S. chocolate and
confectionery manufacturer
• Initiated Enterprise 21 project in the
late 1990s
• Goals: Modernize IT infrastructure,
address Y2K issues, enhance supply
chain
• Software from SAP,
Manugistics, and Siebel
Systems
• Aimed to manage a complex
supply chain efficiently

3. Big Bang Implementation
-Chose simultaneous rollout of all ERP
modules
-Delayed launch to July 1999, coinciding with
peak sales season
Implementation Strategy & Issues
Key Problems
-Order processing and fulfilment delays
-Inventory Mismanagement

4. $150 million
Revenue loss in (1999)
Decline in stock price
Peak Price: $35 per share in late 1998 or 1999
Lowest Price: Nearly $15 per share in 2000
Profit Drop in Q3(1999)
57.14%
19%
Financial Impact of ERP Implementation Issues

5. Root Cause of ERP Failure
• Unrealistic Timelines
• Lack of Integration Testing
• Inadequate Training
• Poor Project Management
Causes of Failure

6. • Importance of realistic timelines and
phased rollouts
• Critical need for integration testing
and employee training
• Role of effective project management
and leadership in ERP success
Recovery & Lessons learned
Lessons Learned
• Appointed new CIO, implemented
thorough software testing
• Successful ERP
reimplementation by 2002
(mySAP.com)
Recovery Efforts