Hershey’s Food Corporation: Erp Failure

REAL CASE STUDY IHershey Foods dope Failure and triumph with Information Technology Point of think Managerial Point of View Objective To examine the reasons behind the SAP AGS R/3 ERP carrying into action misfortune at Hersheys Food Corporation Problem What could beget strikee otherwise to avoid the SAP AGS R/3 ERP experienceation hardship at Hersheys Food Corporation? Areas of sum upation In late 1996, Hershey Foods Corporation the starring(p) manufacturer of chocolates, confectionaries and beverages in United States of America began modernizing hardware and software schemas in the go with.In an attempt to manage Y2K issues, it chose to replace those systems and shift to client/server environs, which arouse that the companionship had pressing needs which forced the implementation. It was to switch over to the cutting ERP system by April 1999 as per original plan. It chose three software vendors SAP, Manugistics, and Siebel for implementing diverse software modules . The company spent $112 million and 30 months on their ERP bulge. The project was expandning as per schedule till January 1999, and when it came to the final phase of the implementation, the company faltered.Time pressed, they went live in July 1999 which led the company experienced several problems move orders through the system, resulting in shipping delays and deliveries of incomplete orders. The retailers who ordered for Hersheys products could not blend in them on while, even though the company had ample supplies stocked at its warehouses. However, it was too late for Hershey to respond to this problem. As a result, Hersheys revenues dropped. Many reasons chip in been cited for the Hershey ERP failure. One, the project was originally scheduled to take quartet years, but the company forced the implementation to go live in just 30 months.Two, the company simultaneously implemented a customer-relations package and a logistics package, for the most part increasing the over all complexity and employee learning curve. Three, the company went live at their busiest cartridge clip of the year, just originally Halloween, and the resulting delays caused profits to fall. Though SAP was blasted for Hersheys disaster, the companys management viewed it differently. Hence, the line of coarseitude management of the company as well as industry analysts began expression at other reasons for the problems at Hershey.Alternative Courses of Action 1. onwards opting to deploy a rude(a) ERP system, try to consider upgrading your old adjustment of system rather than instantly launching for a new one. to begin with trying to replace those systems and shifting to new ones, try to know the factors impact or contributing to success and failures that you might encounter along the implementation. estimate the needs first before making a decision. Also before opting to deploy a new system, try to stabilize first the phases of its implementation before deviation on li ve.Make sure that the old fluctuation of system is running standstill during the first phase of implementation of the new system. Lest the new system suddenly fall short, you still have the old version of system to back you up during mid-operations. 2. Never have multiple vendors at bottom one project. ERP systems must be installed in a to a greater extent represent manner, especially when applications from multiple vendors are involved. Roll forth the modules in stages and dont attempt to implement other applications simultaneously. 3. Choose the right time for implementation.Implementing it in a wrong time is a messed up. The company would have very well avoided this trouble if only they thought of going forrad with ERP during those occasions when the business process in the whole market experiences a slow movement. And never went to the extent of spending the whole time and efforts on implementing ERP. This bequeath disrupt the normal functioning of the business and creates confusion in the company. Since attention was wholly diverted to ERP it was not possible to rectify the uncertainties that emerged in the business as a result of ERP. . good testing and scheduling. telling testing in an ERP implementation can lessen exposure to failure risks and damages. Never opt to quicken the implementation process, where several modules are implemented simultaneously. The company must consider that the system is fully tested and wee-wee for implementation. If possible, plan the ERP project to go-live date during the companys slow periods. Effective scheduling is important in ERP implementations because the process is lengthy, complicated and delays can growing large cost.However, management must review closely the need for extending the timeline to ensure success of the project. TOWS Threats ERP Implementation in Hershey Foods Corporation can be a difficult, time-consuming, and expensive project for the company. The technology is tightly integrated and req uires a commission from all division. It can take years to complete and cost risks. Moreover, in that respect is no guarantee of the outcome. If not properly planned for, the investment may drive Hershey out of business. Opportunities Hershey make efforts to stabilize SAP and other systems. Hersheys recent upgrade of its ERP system to R/3 version 4. was realized 20 percent under budget and without any of the order affect and product-shipment disruptions that marred the initial $112 million rollout in 1999. It was able to make more than 30 improvements to its core business processes within 60 days of going live.The company cited enhancements such as the automation of pick-list processing and materials management flier verification, plus credit processing for distributors to military customers. These improvements have helped reduce costs and speed up processing times. It has also achieved a near-zero-defect production environment with R/3 4. and is using SAPS business abridgmen t tools to measure the impact of sales and marketing programs as they happen. Weakness Hershey wouldnt specify whether the problems stemmed from its configuration of the system or the software itself. The top management of the company as well as industry analysts began looking at the reasons for the problems at Hershey. Though SAP was blamed for Hersheys disaster, the companys management viewed it differently Hershey decided to take shortcuts since the project was originally scheduled to take four years, but the company forced the implementation to go live in just 30 months.Thus, Hersheys experiences illustrate the fact that most strike ERP rollouts are caused by project management issues, not faulty software. Strengths By experiencing this kind of failures Hershey Foods Corporations IT Staff was able to exceed its slant commitments for the project because of strong program management and executive leadership, diligent supplying and an extensive testing and training plan. This ti me the implementation underwent extensive testing. Hershey made sure to take the time and resources to thoroughly test the computer systems.Conclusion Consider alternative course of action no. 1 Failures in major business/IT projects continue to occur to large companies like Hershey Foods Corporation with so much IT expertise and financial resources. These mistakes cost the price in the long run. Hershey has learned valuable lessons from their SAP implementation and these lessons are to move slow and be more methodical. The lessons learnt can as well serve as indication for failure or bankruptcy by driving you out of the business path.Hersheys failure should caution any company that chooses to implement such broad application and make sure that system exit function smoothly before entering peak sales period. in that respect is one final aspect to be considered in any arcdegree of project failure. All success is rooted in either component part or failure. If you begin with luck, you learn nothing but arrogance. However, if you begin with failure and learn to evaluate it, you also learn to succeed. Failure begets experience. Out of knowledge you gain wisdom, and it is with wisdom that you can become truly successful.Recommendation Before committing to a specific ERP software package, companies like Hershey Foods Corporation need to take the time to evaluate their ERP needs. They need to define in advance 1. How they want to run their business? 2. What problems need to be resolved? 3. What are their priorities? 4. What are the authorized processes what works and what doesnt in the implementation plan? 5. What software will best resolve their problems, meet their goals and priorities?