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A Recipe and Ingredients for ERP Failure
Introduction
An Enterprise Resource Planning (ERP) system covers the techniques and conceptions employed for the integrated management of businesses as a entire from the perspective of forcible use of management resources, to enhance the efficiency of an undertaking. They have numerous avails both direct and indirect. The straight advantages include improved efficiency, information integration for better determination making, faster answer period to customer queries etc. The oblique benefits include better corporate picture, improved customer willingness, customer satisfaction, and so on.
Many organizations and businesses in the earth today as chapter of their strategic development plan,[link widoczny dla zalogowanych], support for ERP solutions which would assist to re-engineer their business processes in order to realize their long-term goals.
The ERP market is very competitive and fast growing market, which is attributed to three basic factors:
a)ERP vendors are continuing to inflate mall presence by attempting fashionable applications such as supply chain management (SCM), sales compel automation, buyer relationship management (CRM) and human resource.
b)To sustain their quick growth, ERP vendors sell more licenses into their installed bottom.
c)While ERP originated in the manufacturing market, ERP method has spread to approximately each type of enterprise including retail, utilities, the public sector and healthcare organizations.
Among the manufacture actors include SAP (Systeme Anwendungen Produkte), Oracle, QAD,[link widoczny dla zalogowanych], SSA,[link widoczny dla zalogowanych], Jenzabar, Datatel, Peoplesoft, Baan, JD Edwards, Scala, Navision, Sungard fair to advert but a few. Even within themselves they categorise each other into High-end and low-end range. In Kenya a cross segment of companies are naturally on the warpath of undertaking or planning to provide in an ERP business solution. The future will see fierce battle for market share resorting to mergers and gain for strategic and competitive advantage.
There is many hype when the vendors are out to shake their products, and ambition all sell and tell you about their success stories and how you ambition leapfrog into your vision. They not acquaint you of any failures of such ERP projects, and there seems to be no consideration paid to lessons learnt from the noted FoxMeyer Corporation scenario, which lead to its bankruptcy and the lengthy valid wars in the courtrooms with their consultants thereafter. ��My basic principle is that you don��t make decisions because they are simple, you don��t make them because they are low, you don��t make them because they are renowned but you make them because they are right��- Theordore Hesburgh.
If not properly planned for, the investment may steer you out of business. The epicenter for the problems that rock the corporate world as far as ERP or in common IT project failure is cared has remained the same over the years.
The following examples are typical of the projects that failed from statistics accessible from The Standish team CHAOS database
��The Hershey foods ERP system implementation failure lead to heavy delivery problems and loss of 27% market
��The FoxMeyer narcotic ERP system implementation failure lead to the collapse of the entire company
��The IRS project on taxpayer obedience took over a ten-year to complete and cost the nation unanticipated $50 billion
��The Oregon Department of Motor Vehicle conversion to new software took eight years to complete and public outcry eventually annihilated the all project
��State of Florida welfare system was plagued with numerous computational errors and $260 million in overpayments
��AMR Corp, Budget Rent A Car, Hiltons Corporation, Marriott �� confirm�� project crumbled having spend over $125 million over four years
��Snap-On Inc project to become to a new order-entry costed the tools company $50 million in lost sales for the first half of 1998
��Greyhound Lines Inc. ��Trips�� reservation and bus-dispatch system�� failed having spent $6 million
��Norfolk Southern Corp. ��Systems integration with merger target Consolidated Rail Corp��. failed having lost more than $113 million in business
��Oxford Health Plans Inc. ��New billing and claims-processing system based on Unix International and Oracle Corp. databases�� resulted in hordes of doctors and patients angry about disbursement delays and errors.
��Universal Oil Products Project �� Software for estimating project costs and figuring engineering specifications�� resulted in unusable systems
IT projects regularly fall short �C and quite few are relinquished fully. Many IT failures must do with perceptions and expectations preferably than absolute bankruptcy of purpose. Most of the so called failures are better classified as ��discouraging successes�� events wherein the major purpose is accomplished, but not without a good handle of frustration and inefficiency �C and a acid savor in the jaws of many users.
Project risks
The FoxMeyer Corporation Delta III project had the following project risks
i)Environmental- the management had tiny or no control. They depended 100% on consultants and vendors who dimmed them from gaining control. The converge of the project dramatically changed provocation the projects costs to escalate
ii)Execution- the project lacked versed and knowledgeable personnel. FoxMeyer did not have the needful skills in-house and was relying on Andersen consulting to appliance SAP R/3 and integrate it with an automated warehouse system from Pinnacle. Over 50 consultants were inexperienced and their turnover was high.
iii)Scope- FoxMeyer was an early adopter of SAP R/3. After the project began,[link widoczny dla zalogowanych], FoxMeyer signed a large contract to supply university health system consortium (UHC). This event exacerbated the need for the unprecedented volume of transactions on their HP servers which they could not cope
iv)Customer order �C the commitment from the altitude management and consumers. This was not the case fall butme of the senior management. There was a morale problem surrounded some of its storage workers. The pinnacle warehouse automation integrated with SAP R/3 intimidated their jobs. With the closing of the 3 warehouses, the conversion to the 1st automated warehouse was a calamity. Disgruntled workers broke inventory, and mandates were not fraught, and faults happened as the new system struggled with volumes of transactions
Project Factors
Factors namely attribute apt escalation of prices embody but no restricted to
a)Project factors- there was a knowledge that continued investment could generate a large payoff. FoxMeyer expected a saving of $40 million annually.
b)Psychological factors- the consultants had prior history of success that encouraged them to persist the project. ��we delivered an effective system, as follows we have for thousands of other clients�� (Computergram international 1998). This established the impression that the project would radically improve the company��s critical actions. FoxMeyer morsel extra that what it could chew but embarking on a fast trace project with unskilled staff.
c)Social factors- the consulting company did not externally defend the project. De-escalating the project via abandonment would have meant bad publicity
d)Organization factors-The advocates for the project afterward were forced to resign because of the delays in realizing the projected savings. A change in management was needed in order to control the increasing costs �C which was too late.
Recipe for failure
��When the management is not controlling the coverage of the project primarily when you anticipate the consultant to provide a sorcery bullet, is a recipe for failure.
��Changing the sails in midstream, by certain deliverables expected within a third of the documented times and volumes is a recipe for failure.
��By engaging in additional corporate projects competing for the lacking finances midway, is a recipe for failure
��By not having appropriate change management policies and procedures, is a recipe for failure
��By going for consultants without prior experience or ERP solutions in which you are the only company within your industry, could be a recipe for failure
��If you do not have a knowledge transfer inscribed in the consulting contract, is a recipe for failure
��If the vendor does not understand your business,[link widoczny dla zalogowanych], is a recipe for failure
��If the project has no clear periods, deliverables and quality control components, is a recipe for failure
��If you have not re-engineered your business processes to be compatible with the capabilities of the technology, is a recipe for failure
��Having multiple vendors within the one project, is a recipe for failure
��Not having an external project audit committee, is a recipe for failure
��Not having a clear end-user training program to transfer skills to employees, is a recipe for failure
��Having the project run as a ��one-man show��, is a recipe for failure
��Having the management over- committed (excessively ambitious, reminding unrealistic deadlines),[link widoczny dla zalogowanych], is recipe for failure
��Team membership not creature amenable for movements, is recipe for failure
��Low morale within group, is recipe for failure
��Unclear statement of requirement, is a recipe for failure
��In no standard implementation theory use, is a recipe for failure
��Inadequate requirements meaning (present processes are not adequately
addressed), is a recipe for failure
��Poor ERP archive culling (the archive does not address the basic
business functions of the client), is a recipe for failure
��Inadequate resources employed by the client,[link widoczny dla zalogowanych], is a recipe for failure
��Internal resistance to changing the 'old' processes, is a recipe for failure
��A poor eligible among the software and users procedures, is a recipe for failure
��A bottom up approximate is employed (the process is not outlooked as a top
management priority), is a recipe for failure
��The client does not properly address and plan for the expenses comprised, is a recipe for failure
��If any functional gaps have not been identified (GAP thinking), is a recipe for failure
��If the implementation does not take into list future scientific convergence, is a recipe for failure

Conclusion
The lessons learnt from the failed ERP projects ought be a wake-up call because corporations currently in ERP projects or contemplating to go that direction. The courses learnt tin for well, serve as a harbinger because failure or bankruptcy by serving as the jetty for launching the rocket to propel you out of the business orbit. The experiences highlighted invest a litmus test above how to lest ERP failure. There is an ultimate appearance to be thought in anyone degree of project failure. All success is rooted in either fortune or failure. If you start with luck, you study naught but arrogance. However, if you begin with failure and learn to reckon it, you too learn to succeed. Failure begets learning. Out of wisdom you gain sagacity, and it is with wisdom that you can become really successful.

References
Alexis Leon,[link widoczny dla zalogowanych], ��ERP Demystified��, 2000
Judy E Scott, ��The FoxMeyer Drugs Bankruptcy��, 2004
Kim watch ��Future Watch��, 2000
Lloyd Rain �� IT Project Failures��, 2005
Computerworld ��Top 10 Corporate Information Technology Failures��, 2000