When Hershey wrote off $112 million in expenses in 2002, it was because their ERP implementation failed. We’ve written about this before, but it’s worth repeating because companies can learn many lessons.
If you can take anything from Hershey’s ERP failures, it is that:
- Any business that plans to implement or upgrade its system must first assess its needs to find a suitable solution for its operations
- ERP implementation requires a clear project timeline and plan to offset delays and costs overruns
- A strong team is needed to manage the project from start to finish
Fast forward to now, where agility and innovation are essential for every business’s survival.
What lessons can be learned from these monumental ERP upgrade mistakes?
How can you tailor these lessons for takeaways to drive a successful ERP upgrade process?
Be the Perfect Customer
Before approaching an ERP vendor, become a great customer. Great customers want to do things better; they want to build trust in the partnership by understanding the collaboration.
Here’s how you can prepare:
Know Your Business Better than Anyone
One of Hersey’s biggest mistakes was failing to understand its needs in fine detail. As a result, the chocolate company struggled to find a suitable ERP vendor (so they chose 3).
You can overcome this by digging deep into your company processes and procedures with the objective of understanding. Talk to stakeholders and managers in every department in your organization, ask them to explain the core of their business processes, both functional and non-functional, and then request a detailed outline of their process requirements.
Make sure you have documentation of each process requirement and procedure. Then analyze these processes and prioritize from the most important to the least important. In your documentation, be very specific about ERP requirements that fit the functions within different units of your organization.
Avoid Ambiguous Communication
Open communication is the backbone of a successful partnership between your business and your vendor, so make open communication fundamental to your entire ERP upgrade process.
But rather than merely being open and transparent, be as clear and precise as possible because building credibility and trust may mean something other than the vendor understanding what you’ve written in your process requirement documentation.
When you share your requirements with prospective vendors, ensure they are detailed and easy to interpret and follow. Offer an individual(s) from your organization to collaborate for the project upgrade in case the vendors need further clarification of your business requirements.
This way, your vendors will not assume to provide ERP features that fit your business requirements. Instead, they will match their solutions to your needs to form a perfect fit.
Remember to communicate with your suppliers about the ERP progress. You are keeping them informed safeguards your relationship with your suppliers and their interest in working with your company.
Find a Vendor that Fits
Be ready to choose a vendor that not only provides what your business needs currently but also in the future. Selecting the right vendor is as much about choosing a partner that is easy to work and collaborate with as it is about choosing a solution with the right features.
Think about it this way, upgrading your ERP system is a process that will take several months to complete. The vendor you choose will also work with several stakeholders, like your employees and executive managers.
Choosing a partner that seamlessly fits your organizational culture and structure is imperative. Consider the ability of your vendors to deliver what they offer, and check if their offerings are filled with statements like “subject to confirmation” even after sharing your comprehensive list of process requirements.
This might indicate that the vendor needs to confirm their capabilities to your requirements, which poses a risk to your overall implementation schedule and costs. Get your key stakeholders involved with the selection process.
Having them onboard makes them a part of the entire upgrade process, meaning they become more invested in finding a vendor they can work with. Ensure you have project leaders in the team so they can coordinate and challenge any assumptions that might hinder your implementation progress.
See the Upgrade Journey Through
Leaving the process to manage itself will take your ERP upgrade from bad to worse. Be intentional. Change is the business culture that will drive your business toward generational success. Even though change is not always readily welcome, celebrate and understand it.
Once you seek to upgrade your ERP system, take control, and leave nothing to chance so that you don’t perpetuate opportunities for things to go wrong. But above all, learn from the mistakes of others.
Is it necessary to upgrade ERP systems?
Yes. You need to upgrade your ERP system to accommodate technology changes, improve security and compatibility, and access your manufacturer’s support, among other reasons.
Can a business fail at implementing ERP systems?
Yes. Companies like Hershey, Levi Strauss, and Nike experienced failed attempts at implementing and upgrading their ERP systems.
How can I avoid the mistakes these companies made?
By learning from them. Plan for the implementation beforehand, know precisely what your business needs, and find the right team to manage the project timeline and costs efficiently.