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Hershey's case study.: ERP Implementation Failure

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.

Business◦
ERP IMPLEMENTATIONERP IMPLEMENTATION FAILURE AT:FAILURE AT:
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
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
ENTERPRISE RESOURCE PLANNING ( ERP ) :
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.
ERP HISTORY
VENDORS OF ERP
Technology Support Costs 55 StrategicStrategic RequirementRequirement LevelsLevels Functionality Goal:Goal: To select theTo select the Most SuitableMost Suitable SoftwareSoftware Package SolutionPackage Solution Vendor ERP Product selection Criteria
STEPS TO IMPLEMENT AN ERP SYSTEM:
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
ERP- IMPLEMENTATION BENEFITS:
Jordan May
 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
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.
““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.
““ENTERPRISE 21ENTERPRISE 21”PROJECT”PROJECT –– OVERVIEW ( CONT’D )OVERVIEW ( CONT’D )
““ENTERPRISE 21”PROJECTENTERPRISE 21”PROJECT –– OVERVIEW(CONT’D)-OVERVIEW(CONT’D)- IT PARTNERS
5. “ENTERPRISE 21”:-IMPLEMENTATION TIMELINES
““ENTERPRISE 21ENTERPRISE 21” –PRE-IMPLEMENTATION” –PRE-IMPLEMENTATION EXPECTATIONSEXPECTATIONS::
““ENTERPRISE 21ENTERPRISE 21” –POST IMPLEMENTATION” –POST IMPLEMENTATION ACTUAL SCENARIO: •Order fulfillment time doubled •15 days delay on orders •Accumulating inventories (+25%)
- 0.5% market share
FAILURE FACTORS:
FAILURE FACTORS:
FAILURE FACTORS:
A NEW CHALLENGE FOR HARSHEY
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”
SuccessfulSuccessful ERPERP LESSONS LEARNED/ CONCLUSIONS:
SuccessfulSuccessful ERPERP LESSONS LEARNED/ CONCLUSIONS
THANK YOU…..