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ERP Implementation Failures
Why do companies often struggle with Information Systems Implementation?
Information systems play a key role in the operations of businesses - they support various functional units such as Finance, HR, Sales and Marketing, Production and Manufacturing, and are integrated into an Enterprise Resource Planning (ERP) system. Being shared by multiple business processes through a centralised database, it helps businesses achieve operational efficiency, supports decision making through the provision of information and can include analytical tools to evaluate overall organisation performance (Mullally, J.,2023).💪
Although many organisations reap the benefits of enterprise systems, why is it that some companies often struggle with their implementation? There are endless examples of system implementation failures, and they can have drastic consequences on firms. Let’s have a look at why:
Poor Management & Understanding of how the Business Processes are Connected.
It is essential that the implementation is company-wide, and the management understand not only how the functions are interlinked but also how they can be improved. For example, Israel Chemical Limited's failed SAP ERP implementation in 2014: The projects manager was inexperienced, and the implementation was focused only on improving financials rather than the needs of the manufacturing and supply chain processes of the business. This oversight led to a loss of $500 million (Lawton, 2021)…. Oops😨– Note: Every part of a business is important!Not choosing the right system & Resisting Change
If an unsuitable system is implemented in a business and if staff are resistant to the change, it can be disastrous. For example, Apple Computer Inc., installed SAP ERP software. Not only does it have tight rules causing a complete shift in the way Apple did business previously, but it was also met with their creative staff resisting the change (Mullally. J, 2023). To avoid this, clear goals must be set, staff roles for the implementation must be established and continuous guidance and support for employees should be available. ☺Lack of Planning, Time & Money
A considerable investment of time and money must be provided on top of planning the process integration. For example, Hershey’s: Although an implementation time of 48 months was recommended, Hershey’s sought a 30-month turnaround for the $115 million dollar investment – this rush ended up costing them a further $150 million and a damaged reputation when it failed. Moral of the story – Don't try the Big Bang method when time and money is involved! Check out the video
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Comments



Excellent examples! It's good to see why some businesses failed with implementation.
ReplyDeleteCertainly - On the positive side, you can check out successful stories here: https://katlynodonnelldigitaleconomyblog.blogspot.com/2023/11/successful-enterprise-application.html
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