Erp Implementation Failure

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Date Submitted: 02/17/2011 03:09 PM

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Enterprise Resource Planning is a term that describes a system of business management in which all facets of a business are integrated. These include sales, manufacturing, planning and marketing[1]. EPR is about integrating all these different aspects of business in one software. Software develops of ERP software include the Carter Group (who originally came up with the term), Peoplesoft, Oracle and SAP.

There have been several attempts of ERP implementation that have been unsuccessful. Most of these failures happened in 1999, in an attempt to manage Y2K issues. This suggests that companies at the time may have been compelled to implement ERP due to pressing needs. The success of company’s that adopted ERP later shows that these late adopters have benefited from mistakes made by other companies. Current research indicates most recent implementations to be successful [2]

Failure of ERP projects occurs at varying degrees. When a project is not fully utilized it can be considered to have failed. Forrester Research in April 2001 reported that about 6 percent of 500 companies that they had surveyed found their ERP systems to be work effectively. Another 79 percent found their ERP systems to be ineffective or somewhat effective.[3] The complexity of implementing ERP projects has been cited as a common and major for ERP implementation failure. The process requires commitment from all divisions of the company to be successful. It consumes a lot of time and is difficult as well as expensive to implement. The tight integration characteristic of the project means that without commitment from all workers and a change in the way of doing business means that it cannot work. ERP projects have been known to cost upwards of $500 million for very large companies and to take years to be fully complete. This happens without a guarantee of the eventual outcome [4]

Hershey Food’s SAPAG’s R/3 implementation illustrates this point best....