ERP vendors do not like to talk about ERP disasters, but the fact is they do happen. More often than not, disaster strikes when a company chooses the wrong ERP vendor for the job. While another company, even within your own industry, may have shining success with an ERP vendor, that same vendor may be a poison pill for your business.
Perhaps the best way to illustrate just how wrong things can go when a company selects the wrong ERP vendor is to give a quick history lesson. These are some of the most notorious ERP blunders.
1) The Hershey/SAP Fail
In 1999, when many were worried about Y2K, Hershey had another problem. Halloween is big business for the chocolate giant, so when it lost around $100 million due to a botched implementation of SAP R/3 ERP, the company's stock took an eight percent nosedive.
2) Nike: Just Sue It
Just a year after Hershey's $100 million free fall, Nike had its own. The company invested $400 million in an i2 ERP system that was supposed to smooth out its warehouse ordering process. Instead, Nike watched $100 million go down the drain and became the subject of numerous class action lawsuits. A simple glitch in a software upgrade led to many stores being unable to meet customer demands for Air Jordans.
3) The HP Customer Ejection
One quick way to get rid of customers is to simply lose their orders. HP's 2004 SAP ERP implementation apparently ran orders through a virtual sieve, leaving 20 percent in a server backlog. HP's customers left in droves to its competitors, eventually costing the company $160 million.
Checks and Balances
Just as the government cannot function without the various branches keeping one another in line, so too should an ERP vendor have checks and balances in place. Since most will not, you must do it for them. Even if your ERP vendor seems to be a perfect fit, you should monitor it closely throughout the planning and implementation phases. If necessary you should hire a third-party consultant that can evaluate each stage and make sure the vendor keeps your company's best interests in mind.
There is no quick fix for an ERP disaster, but you may be able to avoid one if you choose an ERP vendor based on your company's needs rather than the grandiose promises of overeager sales representatives. Furthermore, if you monitor your vendor's progress and work closely with it at every step of the implementation, you may not only survive; you may even come out on top.
I am glad to see that none of these notorious failures involved Microsoft Dynamics ERP products! Get suggestions on how to interview an ERP Software partner and the cost of new accounting software in our white paper “30 Questions Every CFO Must Ask About the Cost of Accounting Software.”
Want to read about some ERP software SUCCESS stories instead? Check out library of Microsoft Dynamics GP reviews and case studies or watch a video of a distribution company that loves their new ERP software.
Source: Real Costs of Choosing the Wrong Software Vendor
By CAL Business Solutions, New England Microsoft Dynamics GP Partner