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IMPLEMENTING ERP

ERP IMPLEMENTATION
FAILURE: A CASE STUDY
Traci Barker and Mark N. Frolick

While it is true that successful implementation of an enterprise resource planning (ERP) sys-
tem is a task of Herculean proportions, it is not impossible. If your organization is to reap the
benefits of ERP, it must first develop a plan for success. But “prepare to see your organization
reengineered, your staff disrupted, and your productivity drop before the payoff is realized.”1
Implementing ERP must be viewed and undertaken as a new business endeavor and a team
mission, not just a software installation. Companies must involve all employees, and uncondi-
tionally and completely sell them on the concept of ERP for it to be a success.2 A successful
implementation means involving, supervising, recognizing, and retaining those who have
worked or will work closely with the system. Without a team attitude and total backing by every-
one involved, an ERP implementation will end in less than an ideal situation.3 This was the sit-
uation for a soft drink bottler that tried to cut corners and did not recognize the importance of
the people so heavily involved and depended on.

NTERPRISE RESOURCE PLANNING Competitive factors, such as an ever-in-


E (ERP), created to conquer the shortcom-
ings of MRPII (manufacturing resource
creasing number of mergers, acquisitions, and
globally aggressive rivals, have helped ERP gain
planning), is a system that involves the recognition. With shorter product life cycles
planning and managing of the entire organiza- and competition presenting itself in innovative
tion’s resources in the most efficient, produc- ways, the advantages gained through the effec-
tive, and profitable manner. Unlike an MRP tive and efficient use of an entity’s resources of-
TRACI BARKER is structure, ERP systems are information systems ten prove to be an excellent investment. A
with Pfizer North that allow an organization to run a synchro- successfully deployed ERP system can increase
American Shared nized configuration that strategically connects customer satisfaction, reduce inefficient spend-
Services, Pfizer Global all aspects of a business. ERP allows an organi- ing, strengthen sales and forecasts, reduce inven-
Manufacturing in zation to gain competitive advantages by sav- tory turn-around times, and enhance employee
Memphis, Tennessee. ing resources and responding to the ever- productivity and satisfaction.1,4 Enticing as these
DR. MARK N. changing business environment.4 Ideally, ERP benefits might sound, they should be prefaced
FROLICK is the eliminates redundant data entry and other inef- with a word of caution: the challenges of im-
Western & Southern ficiencies that accompany departmentalized plementation can cause a beneficial system
Financial Chair of transaction processing schemes.5 Communica- such as this to be more detrimental than the
Information Systems tion between disparate structures, including legacy system it is replacing.
at Xavier University, hardware and software, is made possible in an This article examines the ERP endeavor of a
Cincinnati, Ohio. He
ERP environment. Systems that were once major soft drink bottler. This bottler, which im-
has over 20 years of
incompatible can now be connected in order plemented a major ERP system completed the
experience in IS and
has worked as an
to share data and “tap into hidden informa- implementation, but not without losing signifi-
independent tion.”4 That hidden information, which is vital cant personnel and system functionality. After
consultant for to strategic planning and maintaining a com- committing millions of dollars to purchase ERP
numerous Fortune 500 petitive edge, is now provided with less effort software, the soft drink maker tried cutting
companies. and in real-time. corners during implementation. Relying too

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heavily on its own people instead of consult- company gain a competitive advantage through
ants, the bottler expected too much from its al- lower turnover and lower training costs.7
ready-taxed employees. Trying to minimize Turnover and training are big expenses to
setup costs and reduce expenses, the company companies, especially with the technical skills
overlooked many of the planning team’s recom- that are required to perform many jobs.
mendations regarding the project. This ERP im- With benefits such as enhancing employee

T he
plementation created high turnover and
communication problems, which led to the ter-
satisfaction and extending competitive advan-
tage, the use of integrated systems is becoming
challenges of mination of key people and animosity among widespread in many industries, including the
implementation employees. All of these factors, in turn, led to a manufacturing industry. Coca-Cola bolstered
system that was grossly underused, and in the its success by providing real-time decision
can cause a beginning, a hindrance to the overall business. tools to its sales force while in the field. It
beneficial The purpose of this article is to offer a curso- placed marketing, promotional, and ad infor-
system to be ry understanding of ERP and enumerate some of mation at the fingertips of its sales force to en-
the advantages and disadvantages. It then exam- sure that retailers have the right product at the
more ines a major soft drink bottler and the issues that right time, which in turn has enhanced Coke’s
detrimental led it to consider ERP. It also discusses the trials revenue stream.9 ERP also targets less compati-
than the legacy and tribulations of this ERP initiative and offers ble departments, such as accounting, produc-
suggestions for an organization that may be con- tion, and logistics, and streamlines their ability
system it is sidering implementing an ERP system. to share data. The result is improved transac-
replacing. tion processing, which in turn leads to im-
ENTERPRISE RESOURCE PLANNING proved decision making.5,9
Although implementing an ERP system is no ERP systems, incorporating this better deci-
easy undertaking, most organizations that have sion making, focus on the core business func-
accomplished it successfully will attest to the tions that have a long history of success. It
many benefits it has to offer. Among those perfects those basics and provides a uniform
reaping the benefits are Fujitsu, General way for companies to integrate them into their
Motors, Boeing, IBM, and Coke.6 According to own corporate environment.7 ERP also breaks
some, the ERP industry, eventually reaching $1 down barriers between departments and al-
trillion, will soon be a part of “70 percent of lows the fluid movement of critical data be-
the Fortune 1000 firms.”7 ERP is not limited to tween functions. This fluid movement of
just these organizations. Many other organiza- critical data allows organizations to reap many
tions, both large and small, have or will imple- tangible and intangible benefits alike. Fujitsu,
ment ERP systems in an attempt to gain a General Motors, and Boeing, to name a few,
strategic position by focusing on business pro- have experienced reduced cycle times for clos-
cesses and removing departmental separation ing financials, streamlined global financial re-
that inhibits effective and efficient communica- porting, and internal resolutions to supply
tion. With these barriers removed, ERP systems chain issues.6 Improvements such as these lead
promise to provide many advantages to compa- to an improved business environment. “Incen-
nies.6 tives for adopting enterprise software vary, but
one common thread is anticipated business
improvement.”6 These incentives and an over-
Advantages of ERP
all improvement in their business are what en-
ERP can improve employee satisfaction through
tice companies to undertake the huge task of
removing redundancy and tediousness from
ERP implementation. However, ERP is not
day-to-day activities. It allows more time for val-
without its disadvantages.
ue-added duties, which in turn should lead to a
more fulfilling job for employees. Employees
can become more involved in decision making Disadvantages of ERP
and, with the right training and guidance, can To say that ERP does not have disadvantages
become empowered to make those decisions would be a false statement, at a minimum.
without the close, watchful eye of their super- However, most of the pitfalls relate directly to
visor. If employees are challenged and not the implementation and the organization itself,
bored on the job, they will be more likely to stay and can usually be avoided.Without the proper
with that job, become more experienced, and planning and organization, an ERP project is
therefore become more of an asset to the compa- sure to fail.1 Dialogue about the client’s expec-
ny.8 This experience and knowledge helps the tations, the products capabilities, and the cli-
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ent’s overall commitment to the project are at proper employee involvement, lack of training,
the top of the list of items to cover when dis- inconsistent management support, and a lack
cussing an implementation.1 Without a thor- of good communication were all issues with
ough understanding of all these factors, the the bottler’s implementation effort. Expecting
undertaking could be tragic. Hershey and an employee to perform at an extremely high
Whirlpool are two major corporations that level, with no additional incentive or recogni-

W hen
have had a bad experience with ERP imple-
mentations. In 1999, Hershey had problems
tion, throughout such a long implementation is
asking way too much. Lower-level employees,
undertaking a distributing its products because its new sys- unlike their manager counterparts, need regular
major tem targeted to handle filling and shipping or- reinforcement to know they are performing as
ders was not functioning properly.10 Whirlpool anticipated and to their manager’s expectations.
implementation also experienced major setbacks with its ERP Without routine reinforcement and expected en-
venture, system, which was implemented to improve couragement, it is easy for individuals to lose
employees and the shipping and invoicing processes within their dedication and stamina on a project of the
the company. Both of these companies experi- magnitude of an ERP implementation effort.
constituents of enced problems that probably could have been With the previously mentioned pitfalls in
a project must avoided if certain aspects of the implementa- mind, the following section examines, in detail,
be treated as if tion had been handled differently and accord- the soft drink bottler’s ERP experience. The is-
ing to consultants’ recommendations. sues that led to a need for a new system are dis-
they are just as Although each individual ERP package may cussed, as well as examining the project itself
valuable as the have its downfalls or customization problems, and highlighting some lessons learned. Al-
software itself. the bulk of ERP problems stem from an imple- though the ERP system was implemented and
mentation that is not handled properly. Her- the company was able to conduct business,
shey’s problems surfaced when it tried to many excellent, veteran employees were lost.
coordinate SAP and its customer relationship As a result, the utilization of the system’s abili-
management system. In Whirlpool’s case, the ties was far from maximized.
company ignored warnings from SAP that its
supply-chain model would not be fully ready
for the “go-live date.”10 THE BOTTLER’S EXPERIENCE
Other cases of implementation failure re- Being one of the largest independent bottlers
sult from users trying, theoretically, to fit a in the soft drink industry, keeping up with the
square peg into a round hole. They try to map latest bottling technology was the name of the
a system that did not function properly to be- game. Knowing that canning and bottling tech-
gin with into the new structure of the ERP sys- nology could make or break the bottom line,
tem. For ERP to work precisely the way it was the bottler always maintained the latest and
intended, the organization must make modifica- greatest equipment. On the other hand, infor-
tions to their processes, and not try to modify mation technology was something that had
the software to fit the organization. Although been swept under the rug for some time and
some modifications are permissible, the whole not kept current.
idea of ERP, and business process remodeling, Since its inception in 1935, the bottler had
works better with fewer changes being made been acquiring territory and expanding the
to the original packaged software.6 business. As a result, the need for better infor-
Organizations and managers alike must re- mation grew. To keep up with company
member that when undertaking a major imple- growth, new computer systems were added in
mentation venture, employees and constituents different departments as the need beckoned.
of a project must be treated as if they are just as In doing so, care was not always taken to en-
valuable as the software itself. If this mentality sure compatibility. As the company continued
is not adopted, the company might be better to grow, the different stand-alone systems be-
off saving its money and not initiating the came more and more mismatched, and the
project. ERP software is worthless without the need for an integrated system became extreme-
proper people to implement, use, and maintain ly apparent.
its functionality.2,7 Although further territorial growth was not
As in most of the ERP implementations ef- really a consideration at the time, the addition of
forts that fail, the soft drink maker’s situation new products was always a reality. Consumers
involved multiple reasons for disappointment. are always demanding more and the bottler
However, the areas highlighted in this article wanted to be prepared. Not only were new prod-
are primarily related to personnel issues. Im- uct lines a factor, but the executives of the com-
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pany had continuously expressed their desire for Project Initiation


timelier financial information and decision-mak- Although the ERP product seemed to be the so-
ing tools from the different departments.The ex- lution to all its problems, the bottler still had an
isting systems, which were unique to each enormous amount of work to do. No matter
department, were unable to handle such re- the size of the company, implementing an ERP
quests. Any customized reporting was devel- system is not a trivial project.The bottler chose

N o matter
oped from a multitude of sources and compiled
manually.
not to take the advice of the independent con-
sultants it had hired during the ERP product
the size of the ERP, having gained recognition over the evaluation and recommendation phase, and
company, years, became the topic of discussion as alter- chose its own path for the implementation ef-
natives were contemplated and the company fort.This lack of faith in the consultants’ advice
implementing made the implementation process even more
tried to formulate a solution that would meet
17 modules of the needs of the individual departments, be challenging.
an ERP compatible companywide, and facilitate the in- For the bottler, with a young, inexperi-
tegrated communication that was desperately enced professional staff and a very limited IT
system is not a staff, the undertaking was more than everyone
needed.
trivial project. Due to the fact all these issues were signifi- bargained for. Too much time-consuming and
cant enough to warrant an overall reengineer- technical work was assigned to employees
ing of business practices, the bottler decided to who did not have ERP expertise or the proper
start researching viable options. A great deal of training. In addition to this lack of expertise,
employees were not provided assistance when
time and money was spent to research options,
it came to keeping up with their regular job du-
outline necessary attributes, and perform feasi-
ties. Recommendations, once again from the
bility studies. Employees spent several months
independent consultants, suggesting part-time
completing a study to justify expenditures for
help be provided to employees involved in the
the new system. These studies, along with the
project, were ignored. The bottler had a histo-
inherent need for a new, integrated system, led
ry of a “do-it-yourself” philosophy for all
to the decision to implement ERP.
projects undertaken in the organization. Due
to the enormous workload of the ERP imple-
The Decision to Implement ERP mentation effort, a great deal of strain was
After a great deal of research and discussion, an placed on the employees involved in the
executive steering committee, with the guid- project.
ance of outside consultants and the consensus Communication issues, including employ-
of the information technology (IT) depart- ee encouragement concerns, also added to the
ment, decided to implement an ERP system. burden of the human resources problem. Due
The new system would be capable of handling to breakdowns in the channels of communica-
company growth, communicating between de- tion, and the lack of management support,
partments, and producing customizable, ro- many constituents, including high-level em-
bust reports. The ERP vendor that was “slicing ployees, resigned. Some were voluntary; many
and dicing” capabilities for reporting that ac- others were not.
companied the software. With the already-looming challenges, the
This ERP vendor offered other features that project was off to a shaky start. Choosing the
were attractive to the soft drink bottler. The fi- proper project team and carefully planning its
nancial module, with its abilities to track profit, involvement would be the next major issue at
forecast sales, and manage cash flow, was also hand. Even with other challenges, choosing the
a feature the executives liked. They also liked right employees to involve can make or break a
the fact that the human resources and payroll project. The right employees can successfully
modules would feed benefit, compensation, overcome communication barriers and other
and time and labor information to the profit re- minor obstacles. Keep in mind, however, that
ports. Management appreciated the fact that even the best planned project can be sabo-
production scheduling, cost of goods, and in- taged without proper selection of employees.
ventory would all automatically update the in-
come statement. Once sold on the overall Team Members and Their Involvement
package, the executive committee gave the The selection of ERP project team members lead
green light to go ahead with ERP implementa- to additional project and personnel issues. Al-
tion. though the consultants stressed the importance
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of quality representation, the bottler did not se- important when the job is spread over so many
lect the best candidates for the job. Some of the months, as it is in an ERP implementation ef-
people who were selected to work on the fort. Employers should focus on the communi-
project had only been with the company for a cation process with the employees,
few months and were new to the manufactur- recognizing their hard work and achievements.
ing environment altogether. In fact, most team This effort helps to facilitate a much smoother

C reative
members were fresh out of school with de-
grees in management information systems.
implementation effort.

incentives, in While this may be a good criterion for choosing


Communication Challenges
some way, project team members, it should not be the
In addition to the lack of management support,
only selection criterion.
shape, or form, other communication issues plagued the
These team members were barely trained in
project. Certain project leaders and upper
would have their day-to-day job activities and were not ex-
management did not see the importance of
gone a long perts in the business practices within their de-
sharing certain aspects of the project across
partment. Although other employees were not
way to pacify as well-rounded in their educational back-
modules and departments. When they did,
they were not consistent about the format of
most, if not ground, they would have been much better
the information. Important details regarding
all, team candidates to be involved with the ERP imple-
the way the new system would handle day-to-
mentation effort. It is merely in the company’s
members. best interest to choose the employees who are day actions were not revealed until insur-
the most familiar with the processes they will mountable problems arose. When the prob-
be reengineering.11 lems were revealed, it was often too late and
While selecting the best and most knowl- someone was being blamed for the additional
edgeable employees may mean doing without time and money it was going to cost the com-
their normal contributions for awhile, a compa- pany. Effective communication, in a team set-
ny must be willing to make that sacrifice. The ting such as this, requires a fervent effort by
importance of involving the right people in the everyone; and without its presence, important
implementation cannot be stressed enough. details will be overlooked.11
This does not mean burning out people and ex- In the soft drink maker’s situation, a lack of
pecting them to work 80- or 90-hour weeks ei- communication and uneasiness led to high
ther. It does mean hiring temporary help, or turnover and great resistance to change. Due to
calling on other employees to take up some of lack of conveyance about upcoming training
the slack. Employees should not be expected and expectations, many employees felt over-
to work long hours on both the ERP imple- whelmed and left the organization. They just
mentation effort and their regular duties. The assumed they would not get training. There-
team members should not be expected to per- fore, they were afraid they would not be able to
form at breakneck speed, nor be given more perform their jobs. Along with clear communi-
than normal implementation responsibilities in cation, employees need to be pacified about
order to keep tedious, time-consuming tasks the level of change their job is going to under-
away from consultants.This is exactly what the go. Change, to those not readily involved, can
consultants are there for. An inhuman pace, on be very overwhelming. It can make employees
a project like this, is unreasonable and will very anxious about their jobs, and especially
more than likely lead to the failure of the ERP their future.12 To ease this fear and anxiety, a
implementation effort. clear channel of communication should be
Not only were employees stressed out by kept open at all times. Employees who are not
the number of hours they were required to readily involved in the project should be updat-
work, but they were frustrated by what was ex- ed about the progress and changes being made.
pected of them and the lack of appreciation They should understand that they are welcome
they were receiving. Employees were not of- to make suggestions and ask questions at any
fered incentives or recognition at important point in the implementation effort. It will even-
milestones — or upon completion of the tually be their system and they should under-
project. Management scoffed at the idea when stand that concept at every point during the
it was mentioned. Creative incentives, in some implementation process.
way, shape, or form, would have gone a long Although personal adversity is not always
way to pacify most, if not all, ERP team mem- the end result, as it was for one individual at the
bers. It is only human nature to want reinforce- bottler, ineffective communication does cost
ment of a job well done. It is especially precious time and money for all involved.
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When a communication breakdown came to a stop and think about what it is going to be ask-
head at the bottler, it resulted in the firing of ing of its employees. It should carefully evalu-
the project leader. The head of the IS depart- ate its current staff and analyze its needs for
ment was terminated because of a verbal mis- such a project. It should inquire about the em-
communication between himself and another ployees’ desire to be involved and get their in-
department head. Effective, thorough commu- put as far as how to make that involvement

E ffective,
nication that is documented and administered
through the proper channels can alleviate
more satisfying. The employer should not ex-
pect astronomical performance and should be
thorough many headaches and save valuable, costly re- reasonable about its requests. Asking an em-
communication sources, particularly human resources. ployee to maintain his regular full-time duties
Not only is communication important, but while significantly participating in an ERP im-
that is it is critical that the company as a whole feels plementation effort is just not realistic. Not
documented and that the project is worthwhile. “Convincing only is such heavy involvement extremely de-
administered employees that the changes will ultimately ben- manding, it is not in the employer’s best inter-
efit the company should start with an ex- est. When an employee is asked to participate
through the pressed endorsement from someone at the in an ERP implementation project, it is because
proper channels highest level of management.This person is of- he is good at what he does and he knows the
can alleviate ten called the champion or sponsor of the company well. A company should not jeopar-
project.”13 He must support not only the dize retaining talented employees because it is
many project, but all of the individuals involved as too frugal to hire someone, part time, to take
headaches and well. If employees and project members see up the slack of the person’s regular job during
save valuable, this explicit expression of support, they will be the ERP implementation effort. After all, once a
much more likely to buy into the implementa- company has decided to implement ERP, hiring
costly tion and work toward the common goals of the temporary help to maintain daily activities
resources, organization.14,15 When you ask employees to should be a minor, no-excuses expense.
particularly change the way they have carried out their job
for the past ten to twenty years, you are not
human only asking them to change the method of Recognition and Retention
resources. working, “you are challenging their principles, In addition to the help in carrying out normal
their beliefs and the way they have done things activities, employees must also be given the in-
for many, many years.”16 Supporting this change centive to apply themselves for such a long en-
properly is the only way to ensure success. deavor. The success of the long, daunting task
Looking back at the trials and tribulations of of an ERP implementation can only be in-
this bottler can provide insight. The pitfalls creased by incentives. Albeit a factor, compen-
that it succumbed to can be avoided with su- sation is not cited high on the list of such
perb planning and excellent communication. incentives.8 Employees are satisfied and remain
Taking a look back at those issues, we will high- with an employer for many different reasons.
light the lessons learned and how they can be Some say corporate culture, which is among
applied to make an implementation a success- the top reasons for employee longevity, ranks
ful and good experience for all involved. well above money. Other factors include hav-
ing a sense that their work matters to the com-
pany, feeling valued by their employer, and
ERP IMPLEMENTATION LESSONS
spending time with their families.8 In the case
LEARNED of the soft drink bottler, none of these
Although it is not easy, ERP implementation factors — money or otherwise — were even
should take an organization to the next level of given a second thought. Some members of the
competency. It should not cause turmoil and management team made it clear to team mem-
high employee turnover, as it did in this partic- bers that they felt the ERP implementation was
ular situation. With the lessons learned at this a waste of both time and money, let alone de-
bottler’s expense, perhaps the next company serving of a reward.The team members, on the
undertaking ERP implementation can ensure other hand, thought it was overwhelming and
that valued employees are not lost in the pro- frustrating to be working so hard on something
cess. that was not going to earn them as much as an
additional day off. Employees were struggling,
Employee Involvement pouring so much energy and effort into some-
A company undertaking a task as enormous as thing that was going to take so long and not
an ERP implementation effort should really provide even a morsel of reward.
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Management Support References


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Business Review, 77(1), 16, Jan.-Feb. 1999.
ative ways to reward those players who are put-
S ome ting forth such a tremendous effort. The
reward need not be monetary in nature. Em-
3. Cameron, P. and Meyer, S., “Rapid ERP
Implementation — A Contradiction?”
Management Accounting, 80(6), 58, December
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of a reward.
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and functionality of that system, it will be use-
Production, 109(8), 64, August 1997.
less to the organization.The trained employees 16. Worthen, B., “Nestlé’s ERP Odyssey; Nestle
who grow with the system, and make the sys- USA’s Costly and Protracted Struggle with its SAP
tem expand and evolve with the company, will Project Is a Cautionary Tale for Any Company
be the true assets of the company and more Intent on an Enterprisewide Implementation,”
than worth the investment. ▲ CIO, 15(15), 62, May 15, 2002.
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