When a company begins an ERP implementation projected to last one year, no one expects the timeline to drag on for multiple years. Nor do they expect to take the project to court. Yet, both happened to Southeast Power Group following its massive manufacturing ERP failure.
Beginning in 2014 and coming to a head in 2018, the project was wrought with difficulties from the very beginning. Not only was the SAP Business One system implementation wrought with unexpected challenges, but it failed on launch and materially disrupted the company's business. This resulted in a 2018 ERP lawsuit that totaled more than $2 million.
Today, we're taking a look at what caused the failure, as well as lessons that your business can take away from it.
What Caused Southeast Power Group’s Manufacturing ERP Failure?
Based in Miami, Southeast Power Group is a prominent distributor of diesel and gas-powered generators, among other equipment. When it first partnered with SAP in 2014, the goal was to improve and streamline its operations.
Four years into the project, the team thought its go-live date of January 2, 2018 was viable. It planned to complete data migration on that date, moving its data from Southeast's legacy systems into the SAP Business One platform.
However, the migration was nowhere near as smooth or successful as planned. Project leads discovered the data was corrupted and the pricing was inaccurate. As a result, the ERP system was incapable of creating precise invoices, financial statements or other accounting documents.
On the front end, the operational inconsistencies and errors hindered Southeast's ability to fulfill customer orders on time. This led to a dip in customer satisfaction and left future sales hanging in the balance.
To help recoup the costs of these damages, the company filed a lawsuit against both SAP and its system integrator, seeking more than $2 million to cover the cost of the failed effort.
A Large Governmental Entity's Failed Implementation
Panorama’s Expert Witness team was retained to provide a forensic analysis and written report to the court regarding the failed implementation of a major software developer’s ERP/payroll system.
3 Lessons Learned from a Manufacturing ERP Implementation Failure
Let's take a look at a few of the issues that occurred, and how you can avoid similar mistakes.
1. Team Consistency and Communication is Key
In 2014, Southeast's system integrator assigned a technical team to help oversee and manage the SAP Business One implementation. By 2018, that team had changed three times.
In many cases, a system integrator will initially assign top-tier IT professionals to an ERP implementation. Over time, as the project gets further along, they're prone to swap out those high-demand experts for less-experienced employees.
While the reasons this particular system integrator changed the team are unclear, switching ERP project team members is risky regardless of the caliber of the new team members. The risk lies in the knowledge transfer. Is project intelligence being properly transferred from one party to another?
2. Don't Skip Data Migration Planning and Testing
Many of the inherent issues with the Business One system only came to light when Southeast's scheduled go-live date arrived. To avoid learning of major problems so late in the project, it's important to plan and test the ERP data migration.
This can be a time-consuming and complex process. This is especially the case with an ERP project, as you're often moving information from various systems, formats and storage types into a cohesive, common structure.
Underestimating the complexity of this task can delay your entire implementation, so before going live, we recommend running tests on all your migrated data, taking into account every business group and ERP application.
3. Create a Realistic ERP Project Plan and Timeline
When your legacy systems are running out of steam, it's easy to rush an ERP project timeline. For Southeast Power Group, the one-year mark might have seemed feasible at first. However, once it became clear that the milestone was going to come and go, the team should have taken the time to revisit the expectations and adjust accordingly.
While an ERP project plan ensures everyone is on the same page from the very beginning, your best-laid plans may need adjusting once you begin implementation. For example, you could find that you need to reevaluate your goals, change your timelines or alter your resource allocation.
While there’s nothing wrong with making changes, it's important to know why you're doing it, and how it will affect future project milestones.
We recommend requiring signoffs for each change, so you’re not surprised when the project lasts four times the length you initially expected.
Your Key to Manufacturing ERP Success
While the Southeast Power Group/SAP lawsuit is ongoing, we can still derive key insights from the project challenges regardless of who was ultimately at fault. With these insights, as well as other ERP implementation best practices, you don't have to experience manufacturing ERP failure.
Contact us below for a free consultation, and our ERP consultants will help you get started.
