Nestle Sap Implementation Failure

Case Study Analysis: Nestle USA Installs SAP

Introduction

In 1997, Nestle USA, a subsidiary of the Swiss company Nestle SA, decided to integrate all of the software applications for its various units. Nestle USA was made up of seven divisions at that time, each using its own independent software systems. An analysis was conducted of all the Nestle SA systems and it was determined that “the companies were paying 29 different prices for vanilla-which they all purchased from the same vendor” (Harmon, 2008, p. 488). Each unit within the company used a different coding system and purchasing process for “vanilla”. The plan to standardize the software systems was developed and managed by a key stakeholder team. In March of 1998, the team concluded that purchasing, financial, sales and distribution, accounts payable and accounts receivable would be the SAP modules integrated along with using the Manugistics supply chain module. For 18 months, division staffers analyzed and decided on the standard naming conventions to be used within the systems. At some point it was determined that the SAP project should include provisions that would account for Y2K date problems. This additional requirement meant that the SAP implementation deadline had to be met by December 31st, 1999.

Implementation Results

Once the implementation process began, the stakeholder project management team started receiving feedback and soon discovered that there were issues. “They had completely underestimated the problems involved in changing division cultures or modifying established business processes” (Harmon, 2008, p. 489). The employees who were to be the users of the new system didn’t understand it or how it was going to help them in their job functions. In a 1999 executive committee meeting, the project was turned over to the Vice President and CIO of Nestle USA, Jerri Dunn, a director of process change was hired and a supply chain process change manager was...