The 3 most spectacular ERP fails (and how to avoid becoming number 4)
Originally posted for City Dynamics
We spend a good chunk of our time telling you how quality ERP and CRM software combined with an experienced implementation partner can take your business onto the next level.
It might sound like simple advice, but 75% of these projects still fail – some of them in truly spectacular fashion. Corporate behemoths like Vodafone, Hershey and Nike have all been given major hidings because of botched ERP and CRM implementations, setting them back by as much as $100 million.
So, could going back to basics have saved this unlucky lot? And how can you make absolutely sure that you’re in the 25% of success stories?
A disaster timeline
1. Sweety men pull razor blade out of bag of treats
Hershey Food’s $112 million software bonanza in 1999 combined ERP, CRM and supply chain software in an attempt to transform the organisation’s business processes. However, despite a recommended implementation period of 48 months, company bigwigs demanded a 30-month quick fix. This meant that critical issues were missed during implementation, plunging the sweet retailer into a quagmire. Ultimately, Hershey failed to deliver on $100 million-worth of orders for Kisses and Jolly Ranchers in time for Halloween, leaving a sour taste in the mouth.
Accepting that ambitious digital transformation projects will not be helped by unrealistic deadlines. Hershey ignored expert advice about the implementation timeline and paid the price for doing so. Next generation software and the sharpest minds in ERP implementation can’t be effective if you cut corners.
2. Airs go missing, things get stuffy
A monumental ERP own goal that has long been written into software fail folklore is Nike’s turn of the century supply chain mega-gaffe. A $400 million investment in software overseeing the fulfilment of warehouse orders in 2000 did not protect against a glitch of almighty proportions. Retailers were left scrambling around for Air Jordans and Air Garnetts due to an unequal distribution of the trainers, wounding Nike ultras across the globe.
Knowing that expensive software alone doesn’t guarantee success. Even with so much money at stake, Nike’s planners reportedly just didn’t receive adequate training. Not only did this mean that they didn’t maximise their usage of the software, but it also contributed to them losing $100 million in sales. Ouch.
3. A £4.6m thrashing from Ofcom
In 2016, Vodafone were unceremoniously gut-punched by the biggest fine ever given for consumer protection breaches. The issue? A bungled CRM implementation. In their attempt to move 30 million customers onto a single billing platform, “a small proportion of individual customer accounts were incorrectly migrated”. This meant that Vodafone inadvertently failed to top-up 10,000 customers’ accounts, despite them having paid for the service.
Not biting off more than you can chew. Every implementation process is unique to the organisation concerned – clearly defined deadlines and goals will help steer the project. Issues will occur, so being as pragmatic and flexible as possible will ensure that they don’t snowball. With a sprinkling more of these ingredients, Vodafone could have saved themselves £925,000, instead of shelling it out to Ofcom for their poor handling of customer complaints.