Enterprise resource planning (ERP) is a management technique in which business corporations use software to collect and analyze data in all their integrated departments. ERP provides the capability of tracking down vital resources in manufacturing, processing and marketing platforms of a business entity. Hershey’s is one of the biggest corporations known for the manufacture of chocolates. However, this company represents recent failures in ERP implementation. The company realized a 19% and 8% drop in the 1999 respective quarterly profit margins and stock prices (Chung, Ahmad & Tang, 2015). This decline in the stock prices and profit margins were majorly instigated by the implementation of SAP software in its IT systems.
The company’s failure to effectively implement ERP system stems from lack of proper scheduling. For instance, in its manugistic and Seibel’s management software, the company was supposed to upgrade its IT system for a period of 48 months, instead, Hershey’s requested for a 30-month implementation period so that the system should be ready before its busiest season (Conteh & Akhtar, 2015). The company had originally planned to roll out the project before July 1999. Coincidentally, this period earmarked Hershey’s busiest season. Therefore, it was unreasonable for Hershey’s to reduce the time frame allocated for the project since most of the vital elements of the SAP software used were not properly integrated. Hershey’s poor timing also reinforces its misguided expectation of reaping high rewards with employees who are not well trained with the use of ERP systems. In any ERP implementation, the decline in profits is usually expected due to the steep learning curves.
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Hershey’s also made a mistake in prioritizing expediency over proper software testing protocols (Conteh & Akhtar, 2015). This proved to be one of the major causes of the company’s failure to properly implement the ERP systems. Some of the problems in the software integration processes may have been omitted until it was late enough for effective mitigation. In ERP implementation, it is important to test each phase in order to fragment the system into proper subsections for easy diagnosis. Therefore, it was clear that Hershey’s failed to properly test the three vital phases of ERP implementation. Furthermore, the company has been criticized for implementing all the three stages in a concurrent manner. The shortcuts taken by Hershey’s in system testing and data migration may have played a crucial role in its failure to implement ERP.
References
Chung, S. H., Ahmad, S. I., & Tang, H. L. (2015). Symptoms, causes and remedies for failures in enterprise systems implementation. International Journal of Business Information Systems , 19 (1), 103-118.
Conteh, N. Y., & Akhtar, M. J. (2015). Implementation challenges of an enterprise system and its advantages over legacy systems. International Journal on Computer Science and Engineering , 7 (11), 120.
