|Damages Estimated – $160 Million|
Hewlett-Packard (HP) made devastating news in August 2004: the third-quarter sales for its Enterprise Servers and Storage (ESS) business had declined by 5% from the preceding year to $3.4 Billion.
A vital cause of the decline? ERP Implementation failure. The initiative, which took place at HP’s North American business, aimed to consolidate the company’s system portfolio into a single platform.
Today, we’re delving further into the Hewlett Packard Enterprise Resource Planning System failure to figure out what went awry. We also give crucial takeaways for anybody contemplating a similar undertaking.
Learnings from the HP ERP Failure!
1 – Siloed project teams shouldn’t exist
The term “Enterprise Resource Planning” refers to how everyone in your company is affected by it. The team in charge of planning and overseeing the project’s execution should comprise stakeholders from throughout your organization, such as your sales team and HR department.
With HP, this was not the case. Before the move, each sector had its ERP system, and team leaders struggled to bridge the gaps between departments. Investing in ERP Project Management and organizational change management might have made it easier for HP staff to adjust to the merger.
2 – Maintain data integrity as a priority
When migrating data from historical systems to a new solution, it is vital to ensure that the data is clean, correct, and relevant. Hewlett-Packard recognized that orders were specifically lost when they transitioned from the old ERP program to the new SAP platform. Despite their best efforts, the backlog in the fourth quarter was over $120 Million.
As personnel attempted to resolve the data transmission challenges, it added time to an overdue ERP project. While the procedure takes a significant amount of time and resources, errors are considerably more expensive to correct. Creating workarounds increased the budget and reduced the project’s gross margins.
3 – Be prepared for unforeseen increases in demand
The HP move focused on the company’s server division, which used Intel software. The corporation should have expected such a spike in demand and prepared for it properly.
While this was beneficial for business, it was disastrous for ERP Software that had not been adequately integrated and used. Predictably, the new SAP platform failed to keep up with the rush of orders. The three-week backup plan should have preferably lasted at least five to six weeks to guarantee that everything was operational when orders arrived.
Don’t Let Your ERP Implementation Fail!
Although the Hewlett Packard ERP system catastrophe occurred over 20 years ago, the lessons learned remain applicable today.
When planning your project, it’s natural to choose a shorter timeframe and a lesser budget. However, rushed ventures seldom result in long-term success.
With good planning and the assistance of a professional like Connected IT Consulting, you may avoid a similar outcome with your implementation.
For a quick consultation, please contact our ERP development experts and learn how our team may assist you on your path.