When ERP implementation failure happens, there are always valuable lessons to learn. If you’re planning an ERP project, it helps to be well-read on the famous ERP failures so you can understand where things went wrong and avoid the same problems in your own project.
Average ERP costs are high enough; you don’t want to spend millions of dollars fixing a project that could have been properly managed the first time around.
Today, we’re taking a look at the top 10 ERP failures to date and outlining what they can teach us moving forward.
The Top 10 ERP Failures
In 2014, the monolithic brewing company hired HCL Technologies to transition the company onto a single, unified SAP ERP platform. The move was meant to consolidate the seven instances of SAP that were already installed.
The initial system went live in November 2015, even amid reports that there were already 50 known system defects present.
The team found thousands of other defects after that first rollout, so MillerCoors requested help from HCL. However, MillerCoors decided to scrap the project a month later.
In March 2017, the company sued HCL for more than $1 million.
We have multiple software expert witnesses available for provision of reports, depositions, and testimonies.
LeasePlan is a leader in the global leasing industry. The Dutch car-as-a-service (CaaS) company implemented an SAP ERP solution in 2006 to streamline and centralize its operations.
For about 10 years, LeasePlan used the SAP solution in tandem with its own legacy systems. It wasn’t until 2016 that the ERP implementation truly ramped up. It moved forward ambitiously, as leaders attempted to consolidate 35 systems onto a single platform in a short timeframe.
Following years of setbacks, they abandoned the project in 2019, racking up costs of around $119 million USD.
In 2018, candymaker Haribo spent millions of dollars on an SAP implementation across 16 candy factories and 10 countries.
Soon after the go-live date, supply chain issues arose. The brand couldn’t track inventory or raw materials and wasn’t able to stock stores in a timely manner. As a result, shelves stayed bare, and sales dropped by around 25%.
If Haribo had mapped it business processes before ERP selection, they could have ensured they selected a system that more closely aligned with its needs.
4. Waste Management
In 2005, Waste Management initiated an enterprise-wide ERP project, meant to go live in 2007. The goal was to automate and simplify the company’s order-to-cash processes, which were largely handled by legacy systems and outdated workflows.
The contract award went to SAP, primarily because of claims that WM says SAP made about its solution. They said it was out-of-the-box, adapted to U.S. standards, and could fulfill the company’s goals with minimal customization. However, WM found these claims to be false.
Ultimately, WM was unable to glean any benefit from the software. They filed a $100 million lawsuit against SAP in 2008, later raised that amount to $500 million, and settled out of court in 2010.
In 2016, Revlon acquired another cosmetics brand, Elizabeth Arden. Shortly thereafter, the newly merged company decided to implement an SAP ERP system to control operations.
The rollout happened in 2018, but it was disastrous and ended up costing Revlon millions of dollars in lost sales.
Almost immediately, there were issues with functionality. As a result, the brand was unable to successfully manufacture enough goods to meet customer demand. These product shipments were equal to approximately $64 million in net sales.
Revlon expedited shipping to keep customers happy, but this resulted in sky-high fees and other expenses. By the fourth quarter of 2018, the company announced a net loss of $70.3 million.
6. National Grid
National Grid is a power distribution company serving customers in New York, Rhode Island, and Massachusetts. In 2009, it kicked off an SAP ERP project to streamline operations. The three-year project would go live in November 2012.
As that deadline loomed, it became clear that the system wasn’t ready, but National Grid pushed to meet the deadline, citing that to delay the project further would be costly (to the tune of roughly $50 million). They were also motivated by the recent landing of Hurricane Sandy, which was leaving customers in their service area without power.
As a result of the rushed go-live, there were near-immediate errors with payroll and employee reimbursements. National Grid also experienced problems with invoicing, inventory management, supply chain management, and financial reporting.
To fix these issues, they underwent a massive reconstruction, hiring 850 contractors at a cost of about $30 million per month. This ERP project recovery effort took two years to complete, costing a total of $585 million.
In 2011, German grocery chain Lidl teamed with SAP to replace its in-house inventory system with a new ERP solution. The project dragged on for seven years, but the effort appeared to be going well. SAP even recognized Lidl as one of its top customers in 2017.
However, by the next year, things were quickly heading south. The project ultimately failed, costing Lidl around $580 million USD in total losses.
Most of the challenges stemmed from Lidl’s inability or unwillingness to change its legacy processes to meet the system’s best practices.
For example, the ERP system was built on retail prices, but Lidl had always used purchase prices to manage inventory. Though it seems minuscule, disagreeing on something like this is enough to send a project into the ground.
Hershey’s is always a popular candy, but it’s especially hot on Halloween. That’s why it was so detrimental when, in October 1999, the global candy brand was unable to stock $100 million of orders for its iconic Hershey’s Kisses and Jolly Ranchers.
The shortage stemmed back to errors in the company’s newly installed SAP system. The culprits, in this case, included a rushed project timeframe, an ill-timed go-live, and operational instability.
As a result of the failure, Hershey’s stock dipped 8%.
In 2000 and 2001, Nike spent $400 million to overhaul its supply chain and ERP software. Instead of resulting in operational improvements, the project cost the company around $100 million in losses, as well as a 20% dip in stock, and a handful of class-action lawsuits.
Most of the issues trace back to a too-short project timeline and a lack of ERP system testing. As a result of system errors, Nike ordered low-selling sneakers instead of ones that were in high demand, a mistake that threatened to collapse their supply chain.
To mitigate these setbacks, Nike invested another five years and $400 million in the project.
10. United States Navy
The U.S. Navy first began its ERP project back in 1998. Since then, it has spent more than a billion dollars on the effort, drawing in major systems integrators to help, including IBM. Despite this massive investment of time and money, the organization has yet to see any material improvements.
Throughout the years, the project’s scope has continued to shorten and change, with recent adjustments removing the system’s supply chain components. In all, four iterations of the project have been attempted, without real change or benefit.
Learning from the Top 10 ERP Failures
While the top 10 ERP failures are disheartening to read about, they prove an important point: even the most established companies implementing some of the top ERP systems can run into project roadblocks. Many of these problems can be traced back to a lack of project planning and governance.
Our ERP consulting services can help you bypass these obstacles and find long-term ERP success. Contact us below for a free consultation.