In 2019, Pennsylvania-based manufacturing firm Worth & Company sued Oracle for $4.5 million, citing major deficiencies in their ERP software implementation. As one of the most esteemed full-service mechanical contractors in the Mid-Atlantic, Worth & Co. had a lot on the line with the project, which was scheduled to go live in the fall of 2015.
What went wrong and how did the case escalate to litigation? Today, we’re taking a look at the Worth & Company ERP failure to determine where the missteps began and how your company can avoid a similar setback.
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.
How did the Worth & Company ERP Failure Happen?
Worth & Co. invested $4.5 million from 2015 to 2019 implementing the full Oracle product suite, which included an integrated software system, cloud services and a technical support system.
In the lawsuit, Worth & Co. claimed that Oracle “breached its contractual obligations” during the ill-fated ERP project. The issues covered a slew of allegations that included misrepresenting the suitability of its software system to meet their business needs.
It all started in 2014, when Worth & Co. decided to start seeking proposals for a new ERP system to replace their legacy setup. In February 2015, they hired a now-defunct IT systems integrator to lead the charge, and ultimately decided on Oracle’s E-Business Suite, a solution they augmented with Oracle’s cloud services.
By all accounts, it was supposed to be a relatively quick and simple implementation. The scheduled go-live date was less than a year later, but cracks in the plan started to become apparent by the summer. By the fall, they had descended into full-blown panic.
Ongoing Timeline Adjustments
It soon became glaringly obvious that the ERP implementation was not only significantly delayed, but it was also riddled with critical issues. These issues directly affected both the on-premise implementation and the subsequent cloud integration.
In response, Worth & Co. moved their go-live date to February 2016 – a move that cost them more than $250,000 in additional training and additional support contracts.
That date came and went. Instead, the year was filled with other activities intended to get the system ready for rollout, including:
- Data migration
The Final Straw: System Incompatibility
The new go-live date of February 2017 saw the same delays. In March, Worth & Co. reached out directly to Oracle, claiming that after two years, the software giant had failed to produce an ERP system that was compatible with their business.
Worth & Co. then broke ties with their original systems integrator and hired a new one. That year was spent debugging system issues, rewriting various applications and trying to get to the root of the problem.
The effort proved futile and in 2018, Worth & Co. cut ties with Oracle, choosing to consider a different ERP vendor.
Finally, Worth & Co. sought damages to cover the millions they had invested in software licenses, custom coding, training, testing and patching.
3 Tips for Avoiding Similar Mistakes
1. Develop a Project Plan Early
No, you can’t anticipate every single setback that could delay your ERP project. Still, it’s important to create a plan from the very beginning, including realistic timelines and contingencies.
In addition, you should assign roles and responsibilities to a dedicated ERP project team. This team can ensure the completion of tasks related to people, processes and technology. For example, they can ensure timely change management communication, which reduces change resistance and minimizes productivity dips post go-live.
2. Focus on Business Process Management
Oracle’s E-Business Suite is an integrated set of business applications that covers not only ERP but also customer relationship management (CRM) and supply chain management. While it is a robust solution, the issue with this specific project was that the solution didn’t fit Worth & Co.’s current business processes.
Ultimately, after years of trying to fit Oracle’s solution into their current business model using custom coding and software rewrites, Worth & Co. decided the effort was futile.
If you’re facing similar issues, the problem might lie more with your processes rather than the software itself. Instead of investing in software customization, we recommend improving your processes to fit the ERP solution’s best practices. You can save time, money and future upgrade headaches as you adapt your processes to the system, rather than the other way around.
3. Remember That the Systems Integrator You Choose Matters
A systems integrator (SI) can be pivotal to your ERP implementation success. This is a company that specializes in bringing together different hardware and software components from various vendors and ensuring their seamless interaction. Working alongside your ERP consultant, a systems integrator can facilitate key parts of your project, including ERP system testing and end-user training.
It’s critical to vet the integrity and experience of your SI and ensure they’re fully aware of your short-term and long-term business goals. Worth & Co. hired two separate SIs, but neither was able to provide the range of support required. In fact, the second company spent most of its time trying to reverse the issues put in place earlier.
Take your time with this hiring decision and be clear about the role you expect your SI to assume in the project.
Don’t Spend 4 Years and $4.5 Million Implementing an ERP System
The Worth & Company ERP failure reveals valuable lessons on the importance of contingency planning, project controls and business process management. It also underscores the importance of hiring a systems integrator who fully understands your goals.
Our team of ERP consultants is dedicated to applying lessons learned from our ERP expert witness experience. Contact us below to learn how we can help set your project up for success from the very beginning.