aueb is dept - erp implementation failure at hp: vougiouklidi n. - raoulis d. - papadakis k. 1

AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

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Motos…

• “The best as seen elsewhere,need not be the best for you.”

• “What is your best is what can be successfully implemented.”

• “IT GOES AGAINST human nature to always expect the worst. But with IT projects, pessimism—otherwise known as contingency planning—is the only way to keep small technology problems from becoming full-blown business disasters.”


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Agenda

• Introduction

• The ERP & MySAP Implementation

• HP ERP GOALS

• HP ERP FAILURE

• The Impact of the ERP failure

• Learning

• Q&A


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Agenda

• Introduction


• HP ERP GOALS

• HP ERP FAILURE


• Learning

• Q&A


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Introduction ERP Implementation (1/2)

“Software solution that addresses the Enterprise needs, taking a process view of the overall organization to meet the goals, by tightly integrating all functions and under a common software platform”

Benefits

Streamline different processes and workflows

Easily share data across various departments in anorganization Better tracking and forecasting

Improve efficiency and productivity levels

Lower costs

Improve customer service


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Drawbacks

Implementation is more costly than the product itself

Customization is limited replace existing information technology architecture

Reengineer business processes

Technical support can be shoddy

ERP's may be too rigid for specific organizations (e.g.new direction in the near future)

Total implementation cost 2% or 3% of company’s revenues 50% of ERP implementations fail

Leaders: SAP, Oracle (PeopleSoft, J.D. Edwards), SSA Global, Microsoft Business Solutions, Geac….

Introduction ERP Implementation (2/2)


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Introduction Background

1938: HP started in California by Bill Hewlett & David Packard (electronic instruments company)

1970: first minicomputer

1980’s: major player in computer industry(successful products printers)

1989: close partnership with SAP (consulting services), SAP R\3

1992: acquire Verifone internet commerce

1999: cut-throat competition in computer industry

2001: 2nd largest computer manufacturer in the world (150.000 empl.)

2002: merge with Compaq


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Agenda

• Introduction


• HP ERP GOALS

• HP ERP FAILURE


• Learning

• Q&A


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The ERP & MySAP ImplementationSAP R/3 Implementation

1992: due to increasing demand of it’s products

re-organize bunisses process HP replace numerous legacy systems with SAP R/3 as a standard ERP solutionworldwide.

Goals of Business Process Reengineering:

• Shorter lead & delivery times

• Costs savings

• Establishment of a goal distribution system


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The ERP & MySAP ImplementationMySAP Implementation

MySAP : • Internet-enabled technology product• Reduce costs everything run on a browser• Provide employees with integrated front end + easier for users to

access right information the right time

2001: demand’s on supply chain increased MySAP APO (Supply Chain Management) link employees, customers, partners

First implement in European Imaging & Printing division success!!

2002: Adaptive Supply Chain (e.g. printers: from contract manufacturers to customers)

MySAP Product Life Cycle Management: integrate product lines of Compaq & HP.(challenge: 200.000 products & 100.000 suppliers)


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Agenda

• Introduction


• HP ERP GOALS

• HP ERP FAILURE


• Learning

• Q&A


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In 2003 Gilles Bouchard becomes the project manager of the supply chain and the ERP software implementations.

In 2004 led to create a new organizational model. The aim was to reduce the ERP systems. migrating the ISS (Industry Standard Server) onto an ERP system

The ambition was to implement a single order management system (SAP FOM) with the following attributes :

1) Forecasting ability. 2) Short lead and delivering product times . 3) Increase efficiency and flexibility.

Unification of HP’s legacy SAP order management systems with those of Compaq.

HP ERP GOALS


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Agenda

• Introduction


• HP ERP GOALS

• HP ERP FAILURE


• Learning

• Q&A


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HP ERP FAILURE The Symptoms

But the expectations of the HP officers failed ....

The aim was to enable customers receiving exact product build and delivery dates without placing multiple orders.

Nevertheless , the first symptoms turned up !

20% of the customer orders could not be transferred fromthe old system to the new SAP system due to programming errors .

Although HP fixed these errors in a month, the orders

began to backlog.

Dwindling manual processes were not ableto meet the demand.

The internal investigation started looking for causes


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Project team constitution.

Data integration problem.

Demand forecasting problems.

Poor planning and Improper Testing.

Inadequate Implementatiuon Support/Training.

Project execution problems and not problems with the SAP software.

HP ERP FAILURE Why didn’t it work ? (1/2)


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Ultimately SAP was not a good choice.

The experts of HP didn’t predict the impact in the supply chain.

Employees of HP aware of SAP Fusion Order, suggested that there is a high risk of this migration. Despite this fact, they were ignored by the company.

The implementation was not designed in detail.

Bad collaboration among IT & Business groups.

HP ERP FAILURE Why didn’t it work ? (2/2)


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Agenda

• Introduction• The ERP & MySAP Implementation• HP ERP GOALS• HP ERP FAILURE• The Impact of the ERP failure• Learning• Q&A


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The Impact of the ERP failure (1/2)

Dissatisfied employees. Employees had to hand label shipments of products

Dissatisfied customers due to:• delayed delivering, • bad configuration, • duplicate orders(!!!)

Bad reputation.

Unstable order system of ISS (IndustryStandard Server): problems with data integrity simultaneous increase in

demands for HP’s standard Servers


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The Impact of the ERP failure (2/2)

HP unable to fulfill all orders Loses according to HP

• $400m in revenue.• $160m during the implantation.

Lost market share to IBM, Dell.

Doubtful future for next SAP implementations


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Agenda

• Introduction


• HP ERP GOALS

• HP ERP FAILURE


• Learning

• Q&A


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Learning (1/3)

ERP involved a business change in many divisions of an organization.

there could be no standard approach to its implementation

Always consider Business aspects along with Technical aspects

Business and IT alignment

Make sure to have additional manufacturing capacity ready, BEFORE the ERP rollout.


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Learning (2/3)

Decide upon all 3 basic factors before migrating:

• Define the requirements

• Develop a plan

• Implement the plan using IT integration & user training

Consider time and resources to maintain and reconcile two different systems. Data Integration Systems

No need for merges with Companies of “unhealthy”financial status…


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Learning (3/3)

The least you can do to a group (managers or staff) that have obsolete ideas when dealing with a huge task is not to assign a similar one to them…


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Agenda

• Introduction


• HP ERP GOALS

• HP ERP FAILURE


• Learning

• Q&A


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AQ&Q U E S T I O N SQ U E S T I O N S

A N S W E R SA N S W E R S


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Q&A

• Who is to blame for the migration failure in HP’s ERP?

• Which of the “best in breed” or “single vendor” approaches would you use, were you in Gilles Bouchard’s shoes?

• Under which circumstances would you use an ERP system and why?

aueb is dept - erp implementation failure at hp: vougiouklidi n. - raoulis d. - papadakis k. 1

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