CENTRAL MICHIGAN UNIVERSITY

Mt Pleasant

ERP IMPLEMENTATION
Failures & Successes

AGENDA

1. INTRODUCTION.2
2. ERP FAILURE CASES.2
a) FOXMEYER..2
b) CITY OF SAN DIEGO...4
c) LEVIS STRAUSS...5
3. ERP SUCCESS STORIES..6
a) COLGATE- PALMOLIVE.6
b) AMERICAN PRINT....7
c) AARTI INDUSTRIES.7
4. CONCLUSION....8
5. REFERENCES.9

Introduction:
Success and Failure are the sure outcomes of any activity. But failing at things is most
common for some cases. For example, in India in the beginning of the ERP era, 9 out of 10
implementations failed. SAP ERP implementation is a complex procedure and to be carried with

the perfect plan. Even sometimes, the most perfectly planned projects fail too due to a variety of
reasons like failing to implement the plan etc. Failed projects seek a lot of attention across the
corporate world and take time to be forgotten. Companies with such projects have to go through
a dark shade until they recover the damage created by the failed implementations. In this report, I
am going to discuss some most famous SAP ERP implementations; some of them failed to stand
out long in the history and some succeeded overcoming the jargons of implementation and postimplementation of SAP ERP.
ERP Implementations That Have Gone Wrong:
Studies indicate that 40 to 60% of ERP implementations are classified as failures. [1]. Yet,
Henry Ford stated that Failure is the only opportunity to begin again more intelligently.
Learning from mistakes is very important to succeed in any field. In that context, I am going to
discuss three failed SAP ERP implementations across time.
1. FoxMeyer Case
Company: FoxMeyer (5th largest Drug wholesaler in the United States)
Time Frame: 1992- 1996
Consulting Company: Arthur Anderson Consulting

Implementation of SAP (R/3) for FoxMeyer:

In 1993, FoxMeyer contracted with SAP and Arthur Anderson Consulting group to
implement SAP (R/3) for them. The project was initially budgeted to cost $65 million. FoxMeyer
wanted SAP to be implemented for their old and new warehouses where as it was notified that it
could be implemented only to new warehouses. The new warehouses after the implementation
could handle 10 thousand transactions per day while the legacy system could carry 420 thousand.
Even though customer orders could be filled, there were errors in the client histories and

inventory was handled very poorly. As a result, FoxMeyer had to spend an extra $16 million to
correct those errors. That did not stop there. The final implementation costed way ahead than the
estimated budget and went over $100 million. The final delivered product showed poor
performance, was delivered late and went too ahead of the expected budget. FoxMeyer,
overflowing with debts and heavy budget issues had to file bankruptcy; was acquired by another
major drug company.
What Went Wrong?
SAP (R/3) was primarily designed for manufacturing companies. FoxMeyer was the first
wholesale distributor company that decided to go with that software which was completely
inappropriate for their kind. Poor selection of the software was the first mistake in the case of
FoxMeyer. Looking at how the project turned out, poor planning is also one of the main reasons
for the failure of the implementation. Another point is that only the top management and few
technical people were involved in the system design and was never included with the end user
experience. System users were not included to analyze the reception of the system. I would have
recommended a multiple consultant advice to be taken before the project went onboard. Because
it was the first of its kind it is highly recommendable to seek opinions and comments from
people are experts in that area.
(http://higheredbcs.wiley.com/legacy/college/turban/0471229679/add_text/ch08/fowmeyer.p
df )
2. City of San Diego
Company: Axon for the city of San Diego

Time Frame: cancelled contract in the middle of the project in 2008 due to implementation
issues.
A delayed project for ERP implementation caused a potential 6 month delay for the citys
budget audit report. In 2008, the city of San Diego officials fired Axon, a consulting company
from the project to implement ERP for their city budgeting system. The main reasons stated were
poor project management skills. The project was way overboard the expected budget which was
set at $36 million.
The problems precisely were identified as issues with keeping up with the set goals,
deliverables and cost management. The city officials after a significant trial of the implemented
system identified issues with account information and misplaced things from one account into
another. The completion date was pushed back to 10 months later than the expected and it was
evident that Axon could not follow up with risk management and change management.
From my view, I see lack of a proper leader to lead the project and poor project management
practices as the core reasons as to why Axon would have failed to deliver the anticipated results.
The project was later on taken up by SAP to complete and deliver the product that was well
accepted by the city of San Diego. (http://www.pcworld.com/article/211197/article.html )
3. Levis Strauss
Company: SAP for Levis Strauss
Time Frame: 2003 to 2008
In 2008, Levis had to shut down some of its core distributing centers due to the issues
with the newly implemented ERP system. There were problems with order taking and updating

information to the system. Due to this issue, Levis had no other choice but to stop business for a
week to fix problems with the system and update information for the orders already taken. Even
though the issue was fixed, Levis faced massive order cancellations from the customers who put
the orders before the black out. Levis filed suits against the software provider claiming that their
business was materially at great loss due to the mistakes in the ERP implementation.
What Went Wrong?
Failing to deliver the promised results and poor damage control mechanisms were mainly
responsible for failure of the system. The ERP was implemented in phases and at each stage
there were identifiable rollouts that the software provider along with the third party vendor
Deloitte could not handle neatly. As a result Levis had to lose massive business in the terms of
money and customer base.
As I think about how the project was taken up and lead the company to losses, again
project management plays a major role in deciding the fate of a project. Michael Krigsman, a
famous business news blogger stated this scenario as the Devils triangular relationship as the
responsibility shared between the software vendor SAP, customer Levis and the third party
implementation partner Deloitte.
(http://www.theregister.co.uk/2008/07/10/levis_erp_costs/ )
Successful ERP Implementations:
If 6 out of 10 ERP implementations are failing, it is evident that there are successful
implementations too, right? There are many businesses that have benefitted from centralizing
their core connectors, by building up communication between their respective business elements

and by achieving all of them through ERP implementations. I will discuss threes successful ERP
implementations in this paper.
1. Colgate-Palmolive
Colgate Palm is a famous consumer products manufacturing company that provides high
quality oral, personal and pet food care products from 200 countries across the world. Based in
New York, the USA, in 2004 its turnover was over $10 billion which was huge at that time.
In 1996, Colgate adopted SAP to implement modules for supply chain management,
customer & supplier relationship management and human resource management, order
processing and materials management. From the beginning the company has finished 2 overall
upgrades and is now using SAP (R/3), a famous environment suitable for large manufacturing
companies. The global SAP business warehouse set up for Colgate is now successfully able to
handle 6 TB data related to the customers.
From my view, the factors that led to the successful implementation are the endearing
relationship between Colgate Palm and SAP, perfect planning and the procedure that stick to the
initial plan.
(http://sapinsider.wispubs.com/Assets/Case-Studies/2011/January/Colgate-Palmolive-EmpowersEnd-Users-With-Advanced-Reporting )
2. American Print
American Print is a renowned global company with good customer satisfaction history in
providing digital printing services. Established in 1994, American Print offers services in cover
designing, pre and final printing. With goals to offer warm and easy to use interface for

customers which is flexible and also suits Macintosh platform, American Print wanted to change
implement a new management system in 2001. HansaWorld was chosen to take up that duty. The
initial implementation of HansaWorlds FirstOffice was quite not up to the desired level as it face
issues with updating records and keeping up with the objectives. 5 years after that, American
Print chose to upgrade to a system called Enterprise by HansaWorld. In spite of the bittersweet
experience with the initial product, both of them could achieve successful implementation of the
system which could benefit the company in many ways as in: being able to provide a completely
integrated system, a user friendly interface and improved personnel efficiency to name a few.
From my perspective, both American Print and HansaWorld worked together to overcome the
issues faced by the initial product to achieve a successfully running system. With successful
deliverable products, HansaWorld is gaining popularity. (http://www.erpfocus.com/hansaworlderp-1883.html )
3. Yash Technologies for Aarti Industries.
Aarti Industries, a leading chemical company in India identified the need to change from
their existing legacy as the business was growing. The legacy system could not carry the load of
the day by day increasing demand since it was originally designed to serve small to medium
scaled industries. Due to this Aarti faced potential issues with client management and operational
visibility. Pressured with such issues, Aarti chose Yash Technologies to implement ERP for them.
Initially Yash used their proprietary implementation method called S-Imple (Streamline
Implementation) which is a progressive methodology to carry out ERP implementations. In the
final upgradations, Yash again implemented their own methodological process called ChemOne
which is precisely suitable for implementations in chemical industries. This was a huge success
and very much beneficial to Aarti Industries.

Improved business processes, time saving, decrease customer service issues were some of the
benefits that Aarti Industries gained from implementing the ERP. What can be seen from Aartis
ERP implementation is the true understanding of the existing system, the business needs and
what exactly is required to improve. Yash Technologies integration to provide compatible
system to their client, mutual trust and a well carried project management are the essential
factors that led to the success of implementation.
(http://www.yash.com/Pdfs/SAP-ERP-Chem224-CS.pdf )
Conclusion:
This paper discussed some failed and successful ERP implementation cases. This study is
very much important to learn from those who failed and inspire from who successfully achieved
their goals. Even though there were a lot of failures in ERP implementation, there are many
advancements in the field of ERP like cloud ERPs.

References
1. http://www.pacis-net.org/file/2005/395.pdf
2. http://higheredbcs.wiley.com/legacy/college/turban/0471229679/add_text/ch08/fowmeye
r.pdf
3. http://www.pcworld.com/article/211197/article.html

4. http://www.theregister.co.uk/2008/07/10/levis_erp_costs/
5. http://sapinsider.wispubs.com/Assets/Case-Studies/2011/January/Colgate-PalmoliveEmpowers-End-Users-With-Advanced-Reporting
6. http://www.erpfocus.com/hansaworld-erp-1883.html
7. http://www.yash.com/Pdfs/SAP-ERP-Chem224-CS.pdf