Case Analysis - Nestle Usa Installs Sap

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Case Analysis

Nestle USA Installs SAP

Nestle SA is a giant food and pharmaceutical company that operates all over the world with more than 253,000 employees at 500 facilities in over 80 countries (Worthen, 2002). One major subsidiary, Nestle USA, was created in the late 1980s and early 1990s via acquisitions and by 2002, the company employed some 16,000 employees and generated $8 billion in revenues across seven individual divisions (Harmon, 2007)).

By 1997, Nestles management found that allowing these companies to operate independently created huge inefficiencies and extra costs that prevented them from effectively competing in the e-commerce market. For example, a team studying the various companies concluded that, collectively the companies were paying 29 different prices for vanilla, which ironically, happened to be from the same vendor. It was a huge undertaking just to isolate vanilla and then to determine a common unit price.

Therefore, during that same year, Nestle USA decided they would standardize all of their major software system in all of their divisions. They decided on standardizing five SAP modules, purchasing, financials, sales and distribution, and, accounts payable and accounts receivable. It wasn’t long before they ran into personal and political resistance. The major problem Nestle faced was that they failed to realize how much the project would change their business processes. The problem began early in the planning stage. A key stakeholder team was set up to manage the entire process. However, employees and other stakeholders that would be directly affected were not included as part of this team. The employees actually doing the work, did not understand how to use the system, did not understand the changes, nor did they understand how the changes would help them do their jobs and they had no interest in learning the new system. Even executive managers were angry and confused (Worthen, 2002). Even before implementation...